In limbo, life, and mortgage rates, there is a point where you simply cannot go any lower despite throngs of people asking you how low you can go.
The 30-year fixed rate mortgage (“FRM”) dropped .04% to 2.73% as of January 28, 2021, while the 15-year FRM dropped .01% to 2.2%. Meanwhile the 5-year Treasury-indexed hybrid has remained a stable 2.8%. Most experts believe this mild decrease is the result of investor behavior – specifically, investors have kept their funds in mortgage bonds while the volatile nature of the COVID-era market resolves itself. However, most experts also believe that this is the lowest mortgage rates will go, and we will see those rates increase over 2021.
Some experts argue that an increased mortgage rate will price people out of the housing market, but it’s likely the vast majority of people have already been priced out of the more affluent neighborhoods. On the other hand, some experts note that historically, home sales don’t decrease when mortgage rates go up. For example, in 1994 and 2005-2006, interest rates increased but home sales did not. It appears the reason why mortgage rates increase is important (who would have thought that the economy was a complex organism). In the words of the author of the leading report on the subject “[r]ising interest rates reduce house-buying power and affordability, but are often a sign of a strong economy, which increases home buyer demand.”
At the Chernov Team we understand knowledge is power, and knowledge of how the mortgage rate will impact the real estate market as a whole is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.