{"id":6703,"date":"2021-02-23T06:00:45","date_gmt":"2021-02-23T11:00:45","guid":{"rendered":"https:\/\/blog.sfloridaluxuryhomes.com\/?p=6703"},"modified":"2021-02-23T06:00:45","modified_gmt":"2021-02-23T11:00:45","slug":"the-reason-mortgage-rates-are-projected-to-increase-and-what-it-means-for-you","status":"publish","type":"post","link":"https:\/\/blog.sfloridaluxuryhomes.com\/?p=6703","title":{"rendered":"The Reason Mortgage Rates Are Projected to Increase and What It Means for You"},"content":{"rendered":"
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\"The<\/p>\n

We\u2019re currently experiencing historically low mortgage rates. Over the last fifty years, the average on a Freddie Mac<\/em> 30-year fixed-rate mortgage has been 7.76%. Today, that rate is 2.81%<\/a>. Flocks of homebuyers have been taking advantage of these remarkably low rates over the last twelve months. However, there\u2019s no guarantee rates will remain this low<\/a> much longer.<\/span><\/p>\n

Whenever we try to forecast mortgage rates, we should consider the advice<\/a> of Mark Fleming, Chief Economist<\/em> at First American<\/em>:<\/p>\n

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\u201cYou know, the fallacy of economic forecasting is don\u2019t ever try and forecast interest rates and\/or, more specifically, if you\u2019re a real estate economist mortgage rates, because you will always invariably be wrong.\u201d<\/em><\/p>\n<\/blockquote>\n

Many things impact mortgage rates. The economy, inflation, and Fed policy, just to name a few. That makes forecasting rates difficult. However, there\u2019s one metric that has held up over the last fifty years \u2013 the relationship between mortgage rates and the 10-year treasury rate.<\/strong> Here\u2019s a graph detailing this relationship since Freddie Mac<\/em> started keeping mortgage rate records in 1972:\"The<\/a>There\u2019s no denying the close relationship between the two. Over the last five decades, there\u2019s been an average 1.7-point spread between these two rates. It\u2019s this long-term relationship that has some forecasters projecting an increase in mortgage rates as we move throughout the year. This is based on the recent surge in the 10-year treasury rate shown here:\"The<\/a>The spread between the two is now 1.53, indicating mortgage rates could rise. Actually, a bump-up in rate has already begun. As Joel Kan, Associate VP of Economic Forecasting <\/em>for the Mortgage Bankers Association, <\/em>reveals<\/a>:<\/p>\n

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\u201cExpectations of faster economic growth and inflation continue to push Treasury yields & mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, & last week climbed to its highest level since Nov 2020.\u201d<\/em><\/p>\n<\/blockquote>\n

How high might they go in 2021?<\/strong><\/h4>\n

No one knows for sure. Sam Khater, Chief Economist<\/em> for Freddie Mac<\/em>, recently suggested<\/a>:<\/p>\n

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\u201cWhile there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3% range for the year.\u201d<\/em><\/p>\n<\/blockquote>\n

What does this mean for you?<\/strong><\/h4>\n

Whether you\u2019re a first-time buyer or you\u2019ve purchased a home before, even an increase of half a point in mortgage rate (2.81 to 3.31%) makes a big difference. On a $300,000 mortgage, that difference (including principal and interest) is $82 a month, $984 a year, or a total of $29,520 over the life of the home loan.<\/p>\n

Bottom Line<\/strong><\/h3>\n

Based on the 50-year symbiotic relationship between treasury rates and mortgage rates, it appears mortgage rates could be headed up this year. It may make sense to buy now rather than wait.<\/p>\n

Content previously posted on Keeping Current Matters<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

\n\"TheWe\u2019re currently experiencing historically low mortgage rates. Over the last fifty years, the average on a Freddie Mac 30-year fixed-rate mortgage has been 7.76%. Today, that rate is 2.81%. Flocks of homebuyers have been taking advantage of these remarkably low rates over the last twelve months. However, there\u2019s no guarantee rates will remain this low [\u2026]<\/div>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"bgseo_title":"","bgseo_description":"","bgseo_robots_index":"","bgseo_robots_follow":"","footnotes":""},"categories":[3,134,88,84,86,118,89],"tags":[],"class_list":["post-6703","post","type-post","status-publish","format-standard","hentry","category-blog","category-buying-myths","category-first-time-home-buyers","category-for-buyers","category-housing-market-updates","category-interest-rates","category-move-up-buyers"],"_links":{"self":[{"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=\/wp\/v2\/posts\/6703","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6703"}],"version-history":[{"count":0,"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=\/wp\/v2\/posts\/6703\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.sfloridaluxuryhomes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}