Will mortgage rates increase or decrease in August?

If you’re thinking about getting a mortgage, you may be worried that falling interest rates since the onset of the epidemic may fall in August. The good news is that experts are expected to be at or around historical lows in August 2020.

A group of people on a dirt road in the jungle: the mortgage rate in August

© Photo by Wolfgang Kehler / Lightrocket via Getty Image
Mortgage rate in august

“Given the weak economic background, mortgage rate records are likely to remain at a low level through August and for the foreseeable future. The uncertain nature of coronoviruses and the possibility of a longer economic recovery will keep a lid on mortgage rates,” Greg McBride, CFA, Bankrate Chief Financial Analyst.

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Mortgage rates have continued their decline since the COVID-19 crisis began months earlier. The average yield on a benchmark 30-year fixed-rate mortgage fell to a new record level of 3.30 percent in the last week of July, based on the weekly turnout of Bankrate’s major lenders. A year earlier, the 30-year was 3.97 percent. The 30-year fixed average for the week is 0.67 percentage points below the 52-week high of 3.97 percent.

Where mortgage rates lead in August

Rates are unlikely to rise or fall in the near future, prosecutors agree.

“While some slight diurnal variation can be expected, there should be a slight change in the 30-year fixed mortgage rate in August. Continued demand for 10-year Treasury securities – anchored to long-term mortgage rates – to maintain rates Would work. Hovering around plus or minus 3 percent, “Ken H.W. Says Johnson, real estate economist with Florida Atlantic University in Boca Raton, Florida.

Logan Mohtashami, a California-based lead analyst in Orange County, HousingWire, echoed those ideas.

“The 10-year yield denies any velocity to be less than 0.62 percent,” says Mohtashami. “But we have two factors that can drive rates downward: if government disaster relief is not sufficiently large, and if some recent economic benefits are lost. Also, if coronovirus cases are the second If the buoyancy gets worse, it will cause a 10-year yield to break short. “

In fact, the more our country goes without an effective COVID-19 vaccine, the more uncertain our economy becomes and the more likely it is that rates will remain flat or fall even more.

“How do we manage the epidemic, where mortgage rates last longer,” says Johnson. “With the combination of effective vaccines and treatments, the effect of the virus on the economy will be minimal and, all else being equal, the rate should remain constant.”

The upcoming election may also change matters more than expected.

“I expect the 30-year rate to fall below 3 percent in August, because there will be enough traders nervous in the election cycle that you will flow excess funds into bond holdings, driving rates downward,” says Derek Ezberg , Production Manager for Branch Manager Academy Mortgage Corporation in Yuma, Arizona. “I expect rates to remain low until the end of the fourth quarter and until the income is reported for this year’s holiday season and the election cycle ends.”

August onwards

The Mortgage Bankers Association has predicted that the 30-year fixed rate should remain relatively unchanged over the next five months, moving up to an average of 3.3 percent for 2020 and 3.5 percent in 2021. Freddie Mac expects rates to remain low, which may fall to an annual average. 3.4 percent this year and 3.2 percent in 2021. Fannie Mae, meanwhile, is expected to decline by 3.0 percent in the third and fourth quarter of 2020, and as low as 2.8 percent a year from now.

During the rest of the year and in 2021, McBride believes that the path to mortgage rates will be determined by economy rents, stimulus measures running from the Federal Reserve, and inflation perspectives.

Act soon on a new mortgage or a refinance, experts recommend

Egeberg is convinced now is the most ideal time to buy or refinance a home.

“Asking our grandparents why they didn’t buy more homes when prices were cheaper 50 years ago, our kids would ask us about the ‘Great Interest Rate Decline’ of 2020 and if we could capitalize on these historically low rates Were able to, ”he says. “This is the single biggest buying opportunity of our lifetime considering how cheap debt payments are due to the current interest rate environment.”

Before participating in a decision, however, do your homework first; Crunch the number and make sure you can raise the monthly payment.

“Instead of timing a home purchase based on low mortgage rates, it’s better to make sure your finances are in solid shape before taking the plunge,” McBride says. “Work on improving your credit score, paying off debt, and increasing savings. These steps will better prepare you for a successful homeowner, whether your rate is 2.5 percent or 3.5 percent.”

Photo by Wolfgang Kehler / Lightarket via Getty Images.

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