{"id":7471,"date":"2021-02-23T11:00:45","date_gmt":"2021-02-23T11:00:45","guid":{"rendered":"https:\/\/thezakariagroup.com\/the-reason-mortgage-rates-are-projected-to-increase-and-what-it-means-for-you\/"},"modified":"2021-02-23T11:00:45","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:\/\/thezakariagroup.com\/the-reason-mortgage-rates-are-projected-to-increase-and-what-it-means-for-you\/","title":{"rendered":"The Reason Mortgage Rates Are Projected to Increase and What It Means for You"},"content":{"rendered":"
\n

\"The<\/p>\n

We’re 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’s 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

\n

“You know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and\/or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”<\/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’s one metric that has held up over the last fifty years – the relationship between mortgage rates and the 10-year treasury rate.<\/strong> Here’s a graph detailing this relationship since Freddie Mac<\/em> started keeping mortgage rate records in 1972:\"The<\/a>There’s no denying the close relationship between the two. Over the last five decades, there’s been an average 1.7-point spread between these two rates. It’s 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

\n

“Expectations 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.”<\/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

\n

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

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

Whether you’re a first-time buyer or you’ve 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<\/div>\n

Powered by WPeMatico<\/a><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

We’re 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’s no guarantee rates will remain this low […]<\/p>\n","protected":false},"author":101010,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[110,98,99,102,104,101],"tags":[],"jetpack_publicize_connections":[],"yoast_head":"\nThe Reason Mortgage Rates Are Projected to Increase and What It Means for You - The Zakaria Group<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thezakariagroup.com\/the-reason-mortgage-rates-are-projected-to-increase-and-what-it-means-for-you\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Reason Mortgage Rates Are Projected to Increase and What It Means for You - The Zakaria Group\" \/>\n<meta property=\"og:description\" content=\"We’re currently experiencing historically low mortgage rates. 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