What is the Data Saying?
Mortgage rates are currently quite low in the US, with experts predicting an average rate of 3.03% in 2021. While that is slightly higher than current rates of 2.8%, 2021 would still be boasting one of the lowest numbers we’ve seen in quite some time. However, are these numbers entirely accurate, or will we instead see rates continuing to drop in the years to come?
Experts analyzing the current real estate situation have mixed results in their predictions. While most predict the numbers to tick upwards slightly for next year, certain research shows inconsistencies in interpretations drawn from their data. That could mean mortgage rates might continue dropping, especially when considering the effect that the Covid-19 pandemic has had on the U.S. housing market.
The Low Rates We’ve Been Seeing Might Be Done
When considering the fact that the effects of the pandemic might soon be diminished in their entirety, it’s likely that the housing market will see a resurgence.
In 2020, many people have been hunkering down where they were and thinking little of moving into a new home. Once people are able to go about their business normally, many real estate experts predict that buying homes and planning futures will come back into the picture.
A newly bolstered housing market could mean mortgage rates will climb from this point until reaching pre-2020 levels. If that does happen, then many aspiring homeowners might kick themselves for not investing in a new home when they had the lowest rates possible.
How to Take Advantage of Low Rates
Even if mortgage rates do rise from now on, we’re still seeing historically low numbers. Even when rates have been high, there have been ways to take advantage of one’s financial situation to achieve lower-than-average rates.
Ways to lower your rates include:
- Higher credit score
- Low debt
- Spotless credit report
- Down payments of 20% or more
Any of the above methods can significantly lower the mortgage rates for any aspiring homeowners. When combined with the currently low rates, that can reduce interest to a point that will likely not be seen again for quite some time.
Depending on how attractive your finances are, you could yourself be seen as an asset by lenders. Homeowners are a major source of income for lenders, as they can guarantee income for 30-year periods! If your credit history and finances showcase your quality money management, then lenders could offer you lower rates than their competitors.
The Big Picture
When evaluating finances, mortgage rates and expert opinions, it’s important to remember that the reality is very different for every homeowner. Your rates depend much more heavily on the area you live in and your own finances than any national trends.
Predictions can go awry and be entirely wrong sometimes. Any number of events can happen that can cause the housing market to either skyrocket or crumble. We saw events crash the market in 2008 and 2020, and it could just as easily happen again.
When trying to decide whether it’s a good time to buy, contact a really good realtor to begin gathering information in real time and specific to city. The most effective way of ensuring you’ll have lower rates is to focus on what you can control, and that’s your own finances.