Just when we thought mortgage rates were done breaking records, Freddie Mac announces that 30-year fixed rate mortgage rates have dropped to another new low.
Now, a survey of lenders from Mortgage News Daily have found that average rates for 30-year mortgages has dipped below 3% for the first time in history.
And although these rates are expected to drop even further, experts are warning not to take these remarkably low rates for granted.
Why have Rates Lowered?
The interest on Treasury bonds is what helps determine long-term mortgage rates. But the yields have been so low lately that even Suze Orman recently said that you’d have to be crazy to be in bonds right now.
Last week, the yields slid, and the prices on bonds increased as the number of Coronavirus cases increased, and investors suspecting that the economy will not be recovering anytime soon.
This created a wave of investors selling off stocks and retreating to the safety of bonds. Actions such as these tend to diminish mortgage rates.
As each day passes, more and more Coronavirus cases pop up. But as the economy and stock market suffer, mortgage rates seem to improve.
Doug Duncan, Chief Economist at Fannie Mae, expects dropping mortgage rates to continue to please homebuyers and homeowners interested in refinancing.
Will Rates Rise?
Freddie Mac’s outlook on new mortgage rates is not quite as optimistic as Fannie Mae’s.
Sam Khater, Chief Economist at Freddie Mac, predicts mortgage rates will average 3.4% for 2020 and 3.2% for 2021.
Although experts are making predictions, the market is volatile. Rates could change on a dime, so if you’re considering purchasing or refinancing while rates are low, now may be the time to make a move. Waiting for rates to drop even lower could result in a missed opportunity if rates suddenly rise.