July 7th, 2020 10:00 AM by Jackie A. Graves, President
Experts see today’s record-low mortgage
rates falling or remaining near the same levels in July 2020.
“As concerns about the spread of coronavirus increase, so
do worries about the economic recovery,” says Greg McBride, chief financial
analyst for Bankrate. “This will exert a downward pull on bond yields and
Indeed, mortgage rates have been falling since the
pandemic began. The average yield on the benchmark 30-year fixed-rate mortgage
dropped for the fifth consecutive week to yet another a record low, inching
down to 3.35 percent, according to Bankrate’s weekly survey of large lenders.
down significantly from just one year ago, when the average on a 30-year was
Even if rates don’t fall any further this month, it’s
likely that they won’t rise either. Any anticipation that rates could inch up
has largely vanished.
“Earlier in June there was the expectation that the
economy would come roaring back as lock-down measures were eased, and rates
started moving higher,” says Michael Becker, branch manager for Sierra Pacific
Mortgage in White Marsh, Maryland. “But that has since reversed on the news of
increasing cases of COVID-19 in many states that started to re-open.”
Becker expects rates to remain near their current levels
for the month of July. “It’s hard for me to see rates dropping further since
they are at all-time lows, but I don’t see them rising either,” he says.
What could cause
mortgage rates to fall even more
Mortgage rates could fall this month if COVID-19 cases
continue to get worse, says Logan Mohtashami, housing analyst for trade
But another indicator of where rates could go is the St.
Louis Financial Stress Index, which measures the degree of financial stress in
the markets. Mohtashami says that if the index — which had recovered to below
zero (zero is normal) — starts to break out over 1.21 percent, we could see
rates move down.
Of course, whether rates decline also depends on moves
made by the Fed. “If domestic government spending policies change to less
simulative, the bond market should view that negative,” says Mohtashami. That
could also cause rates to drop.
Yields on mortgages could remain low well past July.
In fact, the Mortgage Bankers Association forecasts that
interest rates will remain relatively flat throughout the rest of 2020 and even
decline slightly in early 2021.
In the third and fourth quarter of 2020, the MBA puts the
30-year, fixed-rate mortgage remaining around 3.4 percent. It forecasts that
rates could dip to 3.3 percent in the first quarter of 2021 and remain there
through the second quarter.
Bankrate’s forecast from the coming 12 months can be
Don’t wait for
lower mortgage rates to act
Though there’s a chance that mortgage rates could fall
this month, they’re already at historical lows. If you’re looking to buy or
refinance a home, now is as good of a time as any.
Refinancing right now, depending on your current mortgage,
could shave $100 or more off of your monthly payment. And you’ll pay just $443
per $100,000 borrowed per month in principal and interest on a 30-year
fixed-rate loan at a 3.4 percent interest rate.
But keep in mind that even with record-low mortgage rates,
it’s still important to shop around. Get quotes from multiple lenders in order
to find the best deal possible.
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