The current super-low mortgage interest rates are one of the driving factors behind the demand for homes right now. Last year, rates hit record lows several times and those rates are staying low throughout 2021. As rates are significantly lower than they were just a year ago, many buyers are beginning to wonder if they should wait in case mortgage rates drop even lower. Though it is tempting to hold out for bigger savings, purchasing a home now may turn out to be more beneficial than waiting until later.
Some real estate experts are expecting rates to rise as the nation begins to get back to business as usual, especially as more and more people decide to take the COVID vaccine. These projections are not for alarming interest rate increases, but the average mortgage interest rate has risen just slightly recently to about 2.79%. Freddie Mac recently released a statement stating that anyone looking to purchase a home would be smart to go ahead and buy to take advantage of the current low rates.
Why Should Buyers Purchase Now Because of Lower Interest Rates?
As the mortgage rates begin to increase it will impact the overall cost of buying a home. The higher the interest rate the more the monthly payment on a home increases. This paired with a rise in home values makes a significant impact. The chief economist at Freddie Mac believes that mortgage rates are headed for a modest increase over 2021. Higher interest rates in the future paired with higher home prices in peak real estate season, like the spring, could make homes a little less affordable than they are right now.
What Will This Mean for Buyers?
Currently the amount of homes up for sale is very low all across the country. This has created a more challenging situation for home buyers. More buyers are expected to start looking for homes in the spring when real estate sales traditionally peak. Some expect the real estate competition to become more aggressive. Len Keifer, the Deputy Chief Economist at Freddie Mac advises buyers not to stop shopping and that if they find a home they love to go ahead and buy it now. He says it may be better to act now and buy a home instead of waiting for interest rates to decrease which may never happen and an inventory that is expected to remain fairly low.
If you are ready to purchase a home or in need of a home that better fits your needs, now is the time to act on it. For more information on available homes in Portland, and surrounding areas in the metro district including Vancouver and Southwest Washington, please contact me any time.