If you have been watching the home loan and mortgage rates for the last months you will have witnessed how volatile interest rates can be. However, the overall trend has been for them to drop. The reasons for this are no secret. Nearly every government with a budget worth looking at has been offering securities for bank loans and doing everything in their hand to promote spending and borrowing for the Real Estate and Construction industries’ sake.
However, in the last weeks, a slight spike in the interest rates may have led some to believe that mortgage rates are not set to rise and that they have missed a great opportunity of refinancing or buying at a super low rate.
Mortgage Interest Rates Forecast: Will Rates Rise In 2021?
If you are one of those who are in a home buying frame of mind and think you have missed the boat, fret not, last Tuesday the average 30-year fixed-rate mortgage was at 5.53% and there are signs that it might continue to drop.
This is small solace for those who have seen interest rates for the same 30 year fixed rate mortgage of under 4.25%
Why the recent spike and what are the signs that the interest rates may well drop below 5% again. Well like everything in this world, nothing is for sure, except taxes and death and I could find you some exceptions there also.
In fact predicting the interest rate is very much like predicting who is going to win the NBA, easy to do, plenty are willing to have a go but not so easy to get right.
Reduction In Home Loan Rates To Spur Demand
Some experts like Guy Cecala, publisher of Inside Mortgage Finance feel this rise in mortgage rates “is an aberration” and that there has been no change in the economy to justify it. One explanation is that the economic blight that has been expected has not hit as hard as expected. Fears of runaway inflation and trillion-dollar deficits have not panned out and the inflation panic has eased off.
Inflation is a prime force when dealing with interest rates. The reason for this is plain to see when you think it out. An interest rate is after all (once your Home Loan take away the Banks cut and expenses) the profit a saver should make for allowing others to use his money. However, if inflation, or the cost of things, goes up then money in five or ten years is worth much less than the same amount today.
This has to be worked into the interest rate to make sure savers don’t lose out and are discouraged from saving. This is actually happening anyway Home Loan because of how low the interest rates and many “savers” are looking elsewhere for investment opportunities. Nevertheless because of Government incentives and other factors mortgage rates remain low.
Inflation is not set to spike, and previous inflation fears have proven unfounded which may cause mortgage rates to drop again In Home Loan.
Having said that mortgage rates will probably not remain low for long so if you are seriously interested in refinancing or buying a home now or very soon from now might be the time for you.