A Few Thoughts About Mortgage Rates

Mortgage rates have been one of the greatest motivators for homebuyers this summer market season. At record lows, the federal interest rates didn’t fluctuate greatly while home inventories were tight with strong demand making for an intense market across the region. With rates remaining around 3%, buyers had the incentive to look at homes perhaps a little outside their price range and sellers had the opportunity to raise their asking price in a market like Las Vegas, which seemingly never slows down. For buyers, inventory is generally increasing and mortgage rates are at an all-time low, therefore they should take advantage of any deals they can find that meet their criteria. Of course, there are potential factors that may influence the rates, and one sticks out pretty blatantly.

The pandemic will likely continue to influence the way the interest rate moves and in what direction. If a vaccine is found this could directly impact the Fed, although there’s really no way to predict the course of the pandemic and how it may wreak havoc on the Fed changes, whether it’s a rise or fall. Some experts say mortgage rates could increase one-quarter to one-half a percentage point by mid-2021 if a vaccine becomes available and the economy is able to recover somewhat. Still others suggest that if no vaccine is found rates could go even lower if the economy is shut down again with a second outbreak next spring.

Everyone is out there making predictions as to what the market will do. According to Bankrate, “In the fourth quarter, the 30-year fixed rate should average 3.1 percent, according to the Mortgage Bankers Association, and remain there throughout most of 2021. The article continues, “Fannie Mae foresees a slight rate dip to 2.9 percent in the last three months of 2020 before the rate declines to 2.7 percent by late 2021. And Freddie Mac predicts rates will average around 3.4 percent this year and 3.2 percent in 2021.”

But really there’s no way to tell. Predictions are only that, predictions. Speculation on how the economy will respond to any number of factors has always been the norm but it’s become especially tricky facing the unpredictability moving forward through the pandemic and the direction the real estate market could move with it. It’s looking better, but there’s no certainty in our future.