Homebuyers have a unique opportunity to take advantage of historically low mortgage rates, according to Freddie Mac. Before the global pandemic, no one could imagine mortgage rates of less than 3% on 30-year fixed-rate loans. In this new world, rates have trailed below that level for months. Additionally, 15-year loans are also on the decline. Mortgage rates continue to break records and hit new lows.
It’s a great time to be a home buyer, seller, or real estate professional.
Lowest Rates in History
The most popular loans continue to be 30-year fixed mortgages. In mid-December 2020, rates on 30-year loans hit historic lows for the 15th time in a row. According to Freddie Mac’s data, interest rates for these products hit 2.67% with 0.7 points. Points are paid to lenders and equal 1% of the loan amount. They are added to the interest rate.
Freddie Mac has tracked mortgage rates since 1971 and has never recorded rates this low for this long. Rates had fallen 2.25 percentage points from 4.94% in November 2018. From an even longer perspective, 30-year mortgage rates averaged 8.15% in 2000.
Low Rates Projected in 2021
Are you planning to buy a home or sell your property in 2021? Low rates are great news for sellers and buyers. COVID-19 is likely to follow us well into 2021, despite vaccines being deployed around the globe. As cases rise in different areas, quarantines and lockdown will continue to mark this unprecedented historical era.
This sobering reality will continue to affect economics worldwide. Businesses must continue to rely on a digital presence to attract consumer attention. CNN reports that 110,000 restaurants closed in 2020. Airlines, cruise lines, and other significant employers teeter on the edge of bankruptcy. In this environment, recovery may happen slowly and painfully.
Mortgage rates typically plummet during economic downturns. With this in mind, can you really expect to see low rates go even lower throughout early 2021? No one knows.
Mortgage Loan Applications Are on the Rise
The market composite index continues to rise, increasing 1.1% in the week ending December 17, 2020. The index, measured by the Mortgage Bankers Association since 1990, reports total loan applications in the United States. The purchase index was up 2% from the prior week and 26% year over year. Refinance rates are also dropping, and the number of new refinance loan requests was up 105% over the previous year.
With the super-heated housing market showing no signs of slowing, the economic downturn continues to be a boon for those brave enough to stay in the market during the pandemic. Those who still have jobs and a steady income should take advantage of low-interest rates that won’t last forever.
Fortunately, vaccines will eventually get COVID under control, and the economy can get back on track. In the meantime, savvy investors will turn their eyes toward the active real estate market.