What Do Mortgage Rate Increases Mean for You?

Key Takeaways:

• Over the last year, mortgage rates dipped below 3% for the first time in recorded history—but we’re already seeing them go up again.
• If you want to make the most of today’s low rates before they increase, now is the time to buy a home.
• Contact Linda Craft & Team at 919-235-0007 to take advantage of the Triangle’s hot real estate market in 2021!

What Buyers Need to Know About the Latest Mortgage Rate Increases

Over the last 50 years, the average rate for a 30-year mortgage has hovered around 7.76%. Today, that rate has plummeted to a jaw-dropping 2.81%. Low mortgage rates can help you save tens of thousands of dollars as you pay off your loan, and they can also make homeownership more affordable.

Thinking about buying a home soon? If you want to take advantage of these record-breaking mortgage rates, you may want to act fast. Rates are expected to increase throughout 2021, and we have all the details you need to know.

Mortgage rates typically correlate with the 10-year treasury rate

It can be hard to predict what will happen to mortgage rates this year, especially as the economy continues to recover from the coronavirus pandemic. There are a few reliable indicators to consider, including inflation and Fed policies. However, one metric has consistently held up over the last fifty years: the relationship between mortgage rates and the 10-year treasury rate.

Over the last five decades, there’s been an average 1.7 point spread between these two rates. Today, we’re seeing a 1.53 point gap—and that means we’re due for a mortgage rate increase.

Rates won’t increase dramatically in 2021

So many potential buyers have been asking us how high rates could climb this year. It’s impossible to predict just how big of a jump we’ll see in 2021, but most experts don’t think they’ll exceed the low 3% range.

If you aren’t quite ready to buy a home, there’s no need to panic about these increases. Just a few years ago, rates were still near 4%—anything below that is still a fantastic deal.

Buyers should move sooner rather than later to score the best rates

Whether you’re a first-time buyer or a seasoned investor, a rate increase of half a point 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 span of the home loan.

If you’re still on the fence about making a move, talk to your local real estate agent or lender. They’ll be able to provide solid financial advice, as well as educate you on today’s mortgage trends. And if you want to capitalize on today’s rates, you shouldn’t wait much longer!

Buy with Raleigh’s Top-Rated Agents

Ready to start your next chapter in the Triangle? Linda Craft & Team has over 350 years of combined real estate experience, and we’d love to help you find your next home. Call us at 919-235-0007, or check out our buyer resources to get started. We can even help you sell your current home before you buy!