Average rates for a 30-year mortgage increased slightly last week, still lingering below 3% – but one expert says that sub-3% mortgage rates could soon be a thing of the past.
The Federal Reserve announced at its September meeting that it was keeping the federal funds rate at 0%, but it could begin raising rates as early as next year.
"The Fed also clarified that it will begin tapering its $120 billion a month in Treasury and mortgage-backed securities purchases, signaling that it views the economic outlook with guarded optimism," said George Ratiu, Realtor.com manager of economic research. "Markets are likely to price in expected tapering as indications of a timeline crystallize, which means that the days of sub-3% mortgage rates may be in the rearview mirror by the end of 2021."
If you want to take advantage of current mortgage rates before they increase, visit Credible to find your personalized interest rates and see how much you can save on your monthly mortgage payments.
Are mortgage rates going up?
Interest rates rose slightly to 2.88% for the average 30-year fixed-rate mortgage for the week ending Sept. 23, 2021, up from the previous week’s 2.86%, according to the latest Primary Mortgage Market Survey from Freddie Mac.
"The slowdown in economic growth around the world has caused a flight to the quality of the U.S. financial markets," Freddie Mac Chief Economist Sam Khater said. "This has led to a rise in foreign investor purchases of U.S. Treasuries, causing mortgage rates to remain in place, despite the increasing dispersion of inflation across different consumer goods and services."
Rising mortgage rate trends also carried over into other mortgage terms. The 15-year mortgage annual percentage rate also increased slightly, rising from 2.12% the previous week to 2.15%.
"For real estate markets, 2021 has been a year of record-high prices fueled in part by record-low mortgage rates," Ratiu said. "Moving into the last quarter of the year, the Fed’s stated intent to cut back on asset purchases is likely to begin nudging rates higher. The move will likely be gradual, giving buyers time to take advantage of still-favorable rates amid a growing number of homes for sale."
If you are interested in lowering your mortgage interest rate, a mortgage refinance can lower your rate and help you save on your monthly payments and over the life of the loan. You can also help lower your payments through a refinance by changing your loan’s term or removing private mortgage insurance. Visit Credible to get prequalified in minutes with multiple mortgage lenders without affecting your credit score and find the best mortgage rate for you.
Housing shortages drive homeowners to refinance
Housing supply remains low, and homebuyers are quickly buying homes that come to market. This dilemma may not let up anytime soon, Khater said.
"On the housing front, homebuyers continue to snap up available inventory, which has improved modestly, and home price growth is moderating," he said. "However, the next few months will be choppy as several home builders are signaling that they are going to deliver less supply amid labor and materials shortages."
But even as the housing market gets more difficult to enter, borrowers can take advantage of the lower interest rates by refinancing their loan amounts. Contact Credible to speak to a home loan expert and get all of your questions answered today.
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