2020 was a turbulent year for everyone, and it seems like 2021 will be no different. What are mortgage interest rates predictions for the following year?
One of a few things that was cheaper for people in the last year were mortgages interest rates. In fact, the rates for a fixed-rate 30-year mortgage reached record lows in 2020. Ever since it started lowering in March, it didn’t stop dropping before the end of the year. According to Freddie Mac’s Primary Mortgage Survey, in July the rates dropped below 3%. Will things stay that way, or will mortgage interest rates rise in 2021?
Will Mortgage Interest Rates Climb Above 3%?
Most economists agree that rates will climb above 3% in 2021, but they won’t become too high. They estimate that the percentages won’t rise above 3.3%. While this may not sound like much, it’s still around half a percentage higher than 2020.
While rates aren’t likely to fall due to improving economy, this still won’t be too noticeable, since they’ll still stay near record lows. Still, this will add tens of thousands of dollars to your mortgage. As mortgage interest rates continue to rise, they’ll probably reach 3.6% in 2022.
Higher rates reduce buying power, so the number of buyers may lower as the time passes. The home price appreciation was rising in the second half of 2020 until it reached 5.3%, and in 2021 it is predicted to lower for a little bit, as it’ll reach around 5.1%.
A small rise in interest rates will greatly increase the cost of mortgage in Wisconsin. Not to mention if the taxes or insurance rises! For example, if your loan was $500,000, a 4-basis point jump will cost you $115 more monthly. If you have a 30-year, fixed-rate mortgage, this will cost you $41,400.44 more.
Another indicator of where the mortgage interest rates are heading is the 10-year Treasure yield. The MBA predicts them to rise to 1.4% in the last quarter of 2021. This is based on assumptions that the recovery from COVID-19 pandemic is headed the right way and that this will help increase the economy together with the new stimulus bill from the new US President Joe Biden.
Refinancing Will Halt in 2021
As the mortgage rates grow, refinancing halts. This is expected to happen in 2021, with refinancing amounts almost split in half. The refinance share is predicted to drop from 57% in 2020 to 41% in 2021. This will depend entirely on mortgage rates. However, even if the rates don’t rise for too much, the refinancing demand market is likely to be quite robust in 2021. Many homeowners will still profit by refinancing in the following period.
In July 2020, over 15 million borrowers were eligible to refinance, since rates have dropped below 3%. As the rates were falling, the number of potential savers was rising, and this expanded all the way to 19.9 million people once the rates hit 2.67% in December.
Once the rates rise, the amount of homeowners who may profit by refinancing will drop once again. For example, if the mortgage interest rates rise to 3.1%, this means more than 6 million people will no longer be able to save money and cut costs with refinancing. In other words, this might be the best moment to refinance or to sell your house and take advantage of the market while the mortgage interest rates are low.
How to Sell Your House to take Advantage of the Low Mortgage Interest Rates?
The rates won’t stay low for much longer, so you should act fast. There are various tips you can find on how to sell your house to take advantage of the low interest rates. Here, we’ll give you a brief list of hints you can use to sell your house fast.
The most important think that you should think of when you’re selling your house is to list it at the appropriate asking price. In order to do so, you should spend some time researching the comparable sales in the neighborhood. Analyze all aspects of the property, such as the existence of a pool or a big yard, the year the house was built, how close it is to the city center, mall, grocery stores and similar important locations. Then you calculate the average price by using the most recent sales possible. Keep it in the 6 month period span. If there is no building that you can compare your own to, you should consider using the properties that are available in the area and approximately add or remove the value depending on the features your house does or doesn’t have. If you offer the property for too high price, no one will want to buy it. If you list it bellow the average price, potential buyers will wonder what is wrong with it. This is why it is important to do this step right.
Offer owner financing
Owner financing is a great option when you want to open up your house to a lot more buyers. There are many people who would want to buy a house who don’t have the best financial history on the paper, but are trying their best to improve their situation. Just be sure to do a background and a reference check for every buyer. Owner financing is also a great option if you would like to have long term monthly payments. If you already have a down payment for your new house, this can be a great option.
Sell to a direct buyer
If you want to make a quick sale of your house, the fastest way to sell it is to find a reliable direct buyer in Milwaukee. Direct buyers are also looking forward to purchase new properties while the interest rates are low, and they come with a bunch of other advantages. Most of them, such as Sparks Property Investors LLC, pay in cash, which means that you will quickly get money in your pocket. This is extremely useful during the times we live in right now. Also, despite them offering lower price than you might like at the first glance, what they offer is what you’ll get – meaning there are no additional expenses, such as closing costs, repair expenses and commissions. If you need to make a quick sale of your property, this might be the best way to go. Especially if you yourself are planning to sell your house just so you can buy a new one while the interest rates are low.