Mortgage rates are all the buzz right now. It seems like everywhere you go, people are talking about how now is the best time to buy a home due to the historically low mortgage rates. This month, the mortgage rate fell to a historic low for 30-year fixed mortgages, which was a shocking surprise for mortgage brokers, economists and home buyers across America.
To put the rate into perspective, in August of 1990, mortgage rates were at over three times higher than the current rate, which to modern home buyers sounds pretty high. But at the time, that rate was much more doable than the dramatic rate just a few years earlier. In 1981, the mortgage rate was at 18.5%, a historic high. This was due to a Federal Reserve war with inflation, and an effort by banks to tame it. The banks’ efforts failed, which drove the mortgage rates to such a skyrocketing high.
So when you consider the current low rate, this is great news for those interested in purchasing a new home, and it’s especially good news for those seeking to save money in the long run. But how long will the current low rate last? And why is it so low to begin with?
When the mortgage rate drops, a slow economy is typically to blame. In 2020, there’s a new culprit: COVID-19. The pandemic caused the economy to take a huge dip and the unemployment rate to rise, two factors that historically have brought on a low mortgage rate.
So will the rate continue to go down? Many lenders predict that with a COVID-19 vaccine and more good news relating to the pandemic, rates will start to creep back up a bit. Economists have been predicting that the current rate will most likely stay put until 2021, but there’s no way to be 100% certain.
If you ever needed a reason to finally purchase the home of your dreams, locking in the current mortgage rate should be all the convincing that you need. If you want to lock in this historically low mortgage rate while you can, the first step in home ownership is getting approved for a mortgage. Meet with one of our knowledgeable mortgage brokers to learn more about your mortgage options today.