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- Mortgage rates have remained near 3% for months, and this trend is expected to continue through June
- Strong housing demand and low inventories pushed up home prices and prevented buyers from taking advantage of low interest rates
- Those who haven’t refinanced in the past few years might be able to save money by freezing the current low rates.
Borrowers should continue to have access to favorable rates in June, with many experts predicting mortgage rates to remain low – nearly 3% – this month.
Over the past six weeks, the 30-year average fixed mortgage rate has remained in a narrow range, hovering between 2.94% and 3%, according to Freddie Mac. And in the weeks and months to come, we may not see mortgage and refinance rates venture well outside those numbers, experts say.
And while current mortgage interest rates are above their historic lows, looking at historical mortgage rates, they are still abnormally low.
Here’s what experts expect to do with mortgage rates in June 2021.
Lindsey Piegza, Chief Economist at Stifel Financial
Piegza does not see mortgage rates making large movements outside of normal fluctuations in the near future. “The [Federal Reserve] basically set a ceiling and a floor on tariffs. And so I really don’t see a lot of opportunity for organic pressures one way or the other, ”Piegza says. But if inflation is higher than expected, the Federal Reserve should take action to prevent rates from rising sharply. “There is definitely a lot of opportunity for… short-term volatility,” Piegza says.
Overall, average mortgage rates are currently exceptionally low. “It’s a sort of hair split between 3%, 3.25% or 3.50%. You ask your parents or your grandparents, they were pretty happy to get a 15% mortgage, ”Piegza says. The Federal Reserve has indicated it would like see prices stay low until 2023, interest rates should therefore remain favorable for consumers in the weeks and months to come.
Tian Liu, Chief Economist at Enact Mortgage Insurance
We could have a bumpy road for mortgage rates as the US and global economies begin the slow road to recovery. “2020 has been chaotic. I think that in 2021, the recovery could also be chaotic ”. Liu said. Last month we saw weaker than expected job growth, but you also can’t rule out better than expected month-over-month job growth. These crises and surges could impact mortgage rates, which are likely to rise as the economy rebounds.
But there are many factors that should help keep rates low. In 2020, the volume of refinanced mortgages practically doubled compared to the previous year for $ 2.6 trillion. Because so many homeowners have already refinanced, we are in a market where “lenders will have to hunt borrowers to get the loans,” Liu says. This competition among mortgage lenders should keep rates lower in the short term.
Jon Bodan, President of Perpetual Financial Group
To understand what’s going to happen with mortgage rates, Bodan suggests paying attention to the economy in general and its impact on the treasury bill market, which strongly influences mortgage rates. As long as Treasuries stay close to their current levels, so should mortgage rates, Bodan says.
At the moment, there doesn’t appear to be anything that seems to push rates down from their current flat path. Recent changes in bond and mortgage rates haven’t happened “It’s just kind of hanging around,” Bodan says of the market. The current low interest rates should therefore be available to borrowers for a little longer.
Erin Sykes, Chartered Real Estate Agent and Chief Economist at NestSeekers International
In the coming months, Sykes believes mortgage rates will remain relatively stable. “But I expect to see an increase in prices between now and September and October, because [home] the prices are getting out of hand, ”she said. So while buyers should continue to have access to great rates, rising home prices are making housing less affordable in many areas.
If there are signs of a sustained rise in inflation, then we could see rates rise. But even if rates increase slightly, they are expected to remain low relative to historic mortgage rates. “In the grand scheme of things, anything below 5% is a great rate,” says Sykes. Probably the biggest hurdle for most potential buyers is low home inventory, not higher mortgage rates.
Robert Frick, Business Economist at the Navy Federal Credit Union
As the economy sees ups and downs on the road to recovery, Frick believes anything can happen with mortgage rates. “There is increased volatility, so it’s next to impossible to forecast rates below 10 or 20 basis points (0.10% to 0.20%) over the next two months,” he says. There are more general trends that indicate rates are likely to stay low.
However, low rates aren’t necessarily helping homebuyers right now. “The people who are currently focusing on mortgage rates are focusing on the bad fact,” says Frick. “The problem right now is the availability of the house.” The demand for housing has exceeded the supply. Builders are struggling to close the gap due to a lack of materials and labor.
What will current mortgage rate trends mean for your June home buying or refinancing plans?
Since the start of the year, rates have increased. Even though they increase in June, they should still be exceptionally low. And that’s great news for anyone looking to refinance.
If you haven’t refinanced in the past two years and have a good credit rating, you may be able to lower your interest rate by 1% or more. For a mortgage of $ 350,000 over 30 years, lowering your rate from 4% to 3% would reduce your monthly payment by more than $ 200.
Refinancing is not free. The initial closing costs are typically 3% to 6% of the loan balance. So you want to make sure you hold on to your new loan long enough to break even. If you save $ 200 each month and have $ 11,000 in closing costs, it will take you over 4 years to break even.
For anyone buying a home, the situation is more complicated. The potential savings available with the current low interest rates have been offset by soaring house prices. Demand for housing has far exceeded supply as we enter peak home buying season. With bidding wars becoming the norm, buyers are struggling to get their bids accepted as homes sell above demand. So it is important for home buyers to be patient and on budget as they navigate this seller’s market.