Mortgage rates for 2020 closed near the lowest levels on record. But those looking to secure this cheap financing should not wait on the sidelines for long.
The 30-year flat rate mortgage averaged 2.67% for the week ending Dec. 31, up by a basis point from the new record low of 2.66% set the previous week, Freddie Mac FMCC,
I mentioned on Thursday.
Meanwhile, the 15-year fixed interest rate mortgage fell two basis points to 2.17% on average, which was a record low for this mortgage product. The adjustable rate hybrid 5-year Treasury index mortgage fell eight basis points to 2.71%.
“As 2020 wraps up, we can look back at a year in which low mortgage rates were solid fuel, robust activity and afforded buyers access to a home,” said George Ratio, chief economist at Realtor.com.
On more than a dozen separate occasions this year, mortgage rates have fallen to record lows, according to Freddie Mac’s Weekly Report. In fact, rates have fallen to levels previously thought not possible, if not impossible.
But a number of factors could push prices higher in the new year. “ Compared to the passage of the newly passed COVID-19 Relief Act, which markets have been anticipating for months, the results of the two-time Senate run-off in Georgia and the possibility of further fiscal waiver are not much certain in the eyes of investors and thus could lead to sharp moves. In bond yields depending on their results, “Matthew Speakman, economist at Zillow ZG, said,
Mortgage rates roughly follow the trend of long-term bond yields, especially 10-year Treasuries. “Until more is known on either of those fronts, it seems unlikely that meaningful movements in mortgage rates will occur,” added Speakman.
In the long term, the course of the epidemic and the economy will have a significant impact on rates. With vaccines now rolling out, it appears the global community is ready to start emerging from the pandemic. If this is beneficial to the US economy as expected, then the prices will definitely rise.
Accordingly, most economists expected an increase in the rate for 2021, although they differed in how much the prices would rise.
Whatever the amount, soaring mortgage rates threaten to make home buying unaffordable at a time when home prices are soaring by record amounts. “We expect rising mortgage rates to pose a challenge to first-time buyers who are still struggling to find an affordable home as inventory has reached new lows and prices continue to rise,” said Ratio.