A brutal winter is winding down, and spring homebuying season is approaching. How are mortgage rates shaping up for this month? After steep increases in February, housing economists also see rates ticking higher in the weeks ahead.
One expert who isn’t optimistic about reduced rates in the short term is Lawrence Yun, chief economist for the National Association of Realtors in Washington, D.C. “Mortgage rates will be higher in March. The prospect for economic recovery is strengthening and thereby lessening the hold on safe U.S. Treasury yields,” he says. “In addition, more stimulus and the accompanying higher national debt will place upward pressure on inflation. Consequently, long-term interest rates, including the benchmark 30-year fixed rate, will be rising.”
Yun envisions that benchmark rate averaging 3 percent in March before creeping up to 3.2 percent by summer and hitting 3.5 percent a year from now.
Daryl Fairweather, chief economist for Seattle-based Redfin, concurs with that forecast.
“Mortgage rates have started to rise in the last few weeks. They will likely stay just above 3 percent through the end of March,” she predicts.
Mortgage rates are expected to inch higher on increased optimism about the economic recovery as well as continued concern about inflation in the near future.
Looking 1 month from now!
The good news, according to Fairweather, is that rates should hover in the low 3 percent range for the rest of 2021. Put that in historical perspective, and it’s easy to conclude that this is still a desirable outcome for borrowers. The bad news?
“It seems like the days of record-low rates are over for now, although it’s hard to know exactly what will happen for the rest of the year,” she says. “But I don’t think rates will grow past what they were pre-pandemic – 3.5 percent to 4 percent – anytime soon, if at all. The Fed has committed to keeping its target rate for federal funds at zero, and it will probably stay that way for a long time as part of their plan to maintain a healthy economic recovery.”
Curious what leading industry organizations prognosticate? In its most recent mortgage finance forecast, the Mortgage Bankers Association foresees the 30-year fixed mortgage rate averaging 3.4 percent across 2021. By contrast, Fannie Mae and Freddie Mac, respectively, expect rate averages of 2.8 percent and 2.9 percent.
So What Does this Mean?
If you are settled into your forever home, have little to no consumer debt., no worries about college tuition, about your employment status, AND you have perfect credit…your days of a 2% mortgage are behind you. However, for the rest of the homeowners out there…
The average household credit card debt sits at $31,000. Consumer spending is rising, and so are the values of properties all across the nation. The time for you to take action and save real money and time still exists. In fact, when we speak of interest rates, they are of zero concern. Why? Simple, consider this: If the bank — any bank — wants to give you a specific interest rate, is it in your best interest? Most likely not. That is why it is critical to have a financial partner in place, that will walk you through your financial objectives. What your mortgage can do for you. Rates rising? Does it matter? Let’s talk about it!