{"id":1499,"date":"2021-02-23T14:38:50","date_gmt":"2021-02-23T14:38:50","guid":{"rendered":"https:\/\/phphouses.com\/blog\/?p=1499"},"modified":"2021-02-23T14:38:50","modified_gmt":"2021-02-23T14:38:50","slug":"reason-mortgage-rates-projected-increase-means","status":"publish","type":"post","link":"https:\/\/phphouses.com\/blog\/reason-mortgage-rates-projected-increase-means\/","title":{"rendered":"The Reason Mortgage Rates Are Projected to Increase and What It Means for You"},"content":{"rendered":"
\"\"

The Reason Mortgage Rates Are Projected to Increase and What It Means for You<\/p><\/div>\n

We\u2019re currently experiencing historically low mortgage rates. Over the last fifty years, the average on a\u00a0Freddie Mac<\/em>\u00a030-year fixed-rate mortgage has been 7.76%. Today, that rate is\u00a02.81%<\/a>. Flocks of homebuyers have been taking advantage of these remarkably low rates over the last twelve months. However, there\u2019s no guarantee rates will remain this\u00a0low<\/a>\u00a0much longer.<\/p>\n

Whenever we try to forecast mortgage rates, we should consider the\u00a0advice<\/a>\u00a0of Mark Fleming,\u00a0Chief Economist<\/em>\u00a0at\u00a0First American<\/em>:<\/p>\n

\u201cYou know, the fallacy of economic forecasting is don\u2019t ever try and forecast interest rates and\/or, more specifically, if you\u2019re a real estate economist mortgage rates, because you will always invariably be wrong.\u201d<\/em><\/p><\/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\u2019s one metric that has held up over the last fifty years \u2013\u00a0the relationship between mortgage rates and the 10-year treasury rate.<\/strong>\u00a0Here\u2019s a graph detailing this relationship since\u00a0Freddie Mac<\/em>\u00a0started keeping mortgage rate records in 1972:<\/p>\n

\"\"

Correlation Between Mortgage Rates and Treasury Rates<\/p><\/div>\n

There\u2019s no denying the close relationship between the two. Over the last five decades, there\u2019s been an average 1.7-point spread between these two rates. It\u2019s 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:<\/p>\n

\"\"

10 Year Treasury Rate Moving Upward<\/p><\/div>\n

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,\u00a0Associate VP of Economic Forecasting\u00a0<\/em>for the\u00a0Mortgage Bankers Association,\u00a0<\/em>reveals<\/a>:<\/p>\n

\u201cExpectations 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.\u201d<\/em><\/p><\/blockquote>\n

How high might they go in 2021?<\/strong><\/h4>\n

No one knows for sure. Sam Khater,\u00a0Chief Economist<\/em>\u00a0for\u00a0Freddie Mac<\/em>, recently\u00a0suggested<\/a>:<\/p>\n

\u201cWhile there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3% range for the year.\u201d<\/em><\/p><\/blockquote>\n

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

Whether you\u2019re a first-time buyer or you\u2019ve 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

Contact us:<\/strong>
\nPHP Houses
\n142 W Lakeview Ave
\nUnit 1030
\nLake Mary, FL 32746
\nPh:\u00a0(407) 519-0719<\/span>
\nFax:\u00a0(407) 205-1951<\/span>
\nemail:\u00a0info@phphouses.com<\/p>\n

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THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"

Based on the 50-year symbiotic relationship between treasury rates and mortgage rates, it appears mortgage rates could be headed up this year. Finish Reading The Reason Mortgage Rates Are Projected to Increase and What It Means for You<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[69],"tags":[38,15,10,18,9,49,42,280,33,228,63,12,48,13,28,47,19,323,6,17],"_links":{"self":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/1499"}],"collection":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/comments?post=1499"}],"version-history":[{"count":1,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/1499\/revisions"}],"predecessor-version":[{"id":1503,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/1499\/revisions\/1503"}],"wp:attachment":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/media?parent=1499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/categories?post=1499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/tags?post=1499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}