- Rates are extremely low, so you can still get a good deal on a mortgage.
- It’s a difficult market for homebuyers because there are few homes for sale.
- In the long term, expect mortgage rates to rise.
For the first time in over 10 weeks, mortgage rates actually fell last week.
While this small decline doesn’t look to be part of a bigger overall trend, it’s a temporary reprieve from the climbing rates we’ve had this year. “We’re kind of at a plateau right now for rates … upward pressure doesn’t seem to be as evident as it was back in February or early March,” says Keith Gumbinger, vice president of the mortgage information site HSH.com. But flat mortgage rates won’t last if there are new indications showing higher than expected economic growth or inflation, he said.
Looking over the long term, most experts forecast rates to rise above their current levels. “Rates are becoming reflective of a solidly growing economy, with somewhat higher inflation,” says president of Naroff Economics, Joel Naroff. Rates are still low from a historical perspective, but the record lows of a few months ago were an anomaly we are unlikely to see again.
So if you’re looking for a home loan, the longer you wait, the higher your mortgage or refinance rate is likely to be.
Where Are Mortgage Rates Headed This Week?
Mortgage rates don’t seem to be poised for a severe change this week. “I think they’ll probably be reasonably stable relative to this week, wondering one way or the other couple of basis points,” Gumbinger says.
There are a number of economic reports coming out to pay attention to, such as the Consumer Price Index for March, which is a measure of inflation. But outside of a significant or unexpected event, the pressure for rates to move up should continue to grow in the coming weeks and months.
“When I look at the weekly numbers I ask myself, ‘What would keep it from going up again?’ Not, ‘Where is it going to go?’” Naroff says. As vaccination rates continue to rise and people start returning to work, look for rates to climb higher.
Will Buying a House Be Getting Any Easier?
Thanks to rising mortgage rates, potential homebuyers are now paying more for the same home loan now then they would have three months ago. But don’t expect this to put an end to the hot real estate market, where bidding wars have become standard. “Interest rates aren’t the problem in the home buying market, at least coming into this spring,” Gumbinger says. “Inventories are so thin in the marketplace and competition for homes so strong, interest rates don’t play into that.”
So in the near term, it doesn’t look like it will be getting any easier to get an offer accepted on a home. And rising home prices could continue, even if they aren’t climbing as fast as before.
Another reason today’s mortgage rates haven’t put much of a dent in demand for homes is that they still aren’t high. “Even with [rates rising], we remain near historic lows. So mortgage rates are favorable,” Gumbinger says. That means homebuyers are still lining up to get a good deal on a mortgage for one of the few homes that’s for sale.
How Get the Best Mortgage Rate
The mortgage rates we reference are always average rates, but the actual interest rates you may be eligible for will be based on a variety of factors, and could differ from the average.
Your credit score and loan-to-value ratio (LTV) have a large impact on your mortgage rate. Not only that, but each lender will evaluate your individual circumstances differently. So it’s critical to compare offers from a handful of lenders.
To effectively assess mortgage loan offers, you’ll need to submit an application. Once your information has been reviewed, you’ll receive a Loan Estimate. Each Loan Estimate you receive will be identical, which makes comparing offers easy. Be sure to review not only the interest rate, but also the APR, which factors in the fees and gives you a better idea of the overall cost of the loan.
Here’s How Much a Change in Mortgage Rates Will Cost You
Even though some experts don’t expect huge rate changes this week, over time small changes matter.
A small rate increase from 3% to 3.05% would cost you $10 more a month and an extra $3,280 in interest over the life of a $350,000, 30-year loan. If you had that same rate growth each week for a month, it would add up to a $38 monthly mortgage payment increase and over $13,700 in additional interest.
So over time, rising interest rates can have a big influence on how much house you can afford.