Last year, we saw mortgage rates that blew us away. These low mortgage rates were the result of the movement of the 10-year Treasury bond yield and our shifting economy.
Rates stayed low at the end of 2020 without much change. Cue the start of 2021 and we saw new record lows.
Read further to learn where these numbers are at and what they mean for Real Estate.
How low are we talking?
At the beginning of the month, rates for a 15-year fixed-rate mortgage dropped to 2.16%. A year ago, the average rate for a 15-year fixed-rate mortgage was 3.07%. That is nearly an entire percentage point higher.
The average rate for a 30-year fixed-rate mortgage dropped to 2.65%, whereas it averaged at 3.64% a year ago.
This is the lowest we have seen in nearly 50 years. That is the entirety of how long FreddieMac has been publishing their survey.
What does this mean?
While homeowners can obtain a more affordable mortgage payment with lowered interest rates, there is always a tipping of the scales. To offset these low rates, housing affordability has decreased as well.
Over the years, home prices have been steadily rising. With these lowered interest rates, it is now happening at a quicker pace.
Read more about rising home prices and other 2021 market predictions.
How are potential home buyers and sellers affected?
Interest rates may have taken another dip, but not much else has changed. Inventory is still low and rising home prices make it difficult for buyers to find their dream home. The rush of new homeowners hitting the market to claim these low-interest rates is the culprit for low housing inventory.
To better navigate such bumpy terrain, do your research on bidding wars and other inevitable roadblocks you may encounter.
As for sellers, now is your prime time to sell in this seller’s market. You can stand to make a quick sale as well as a profit. Check out these tips on negotiating with buyers.
What does the future hold for Real Estate in 2021?
Much like we predicted back in December, mortgage rates will start to rise steadily throughout the year, averaging 3.2%.
Home prices will still be on the rise but will start to flatten out.
Younger Millennials and older Generation Z will start to shape the housing market as they start to buy their first homes.
Despite chatter in the Real Estate sector, an impending recession is not likely upon us.
Still have questions about the 2021 Real Estate market? Contact us today!