Mortgage Rates Below 3%? Really?
Could mortgage rates sink as low as 2.9% in 2021?
Fannie Mae is forecasting that the rate for the 30 yr FRM (Fixed Rate Mortgage), will fall to 2.9% in the second quarter of 2021 (one year from now). If it does, it's possible that borrowers with very strong credit could see rates in the mid- or even low-2's. This will be important as the prices for existing home sales continue to rise.
To put this in perspective, prior to this coronavirus pandemic of 2020, the lowest average mortgage rate recorded was 3.31% in 2012 (source, Freddie Mac). This March when the US economy was blindsided with the ramifications of COVID19 causing a near halt to all business, that record low was broken. The new lowest average mortgage rate is 3.29% (source, Freddie Mac). For comparison, in the first quarter of 2019 just over a year ago, the average 30 yr FRM mortgage rate was 4.4%. That's a big difference and the savings (or expenses) can really add up over the life of a loan. As Fannie Mae economists are predicting existing home prices will continue to rise, these lower rates are the counterbalance so that owning a home can still be affordable.
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