There has been much talk this year about mortgage rates steadily rising. Since February, they have been creeping upward. However, they have still remained at historic lows throughout 2021, making it a great time to apply for a mortgage loan or home refinance.

July 2021 Mortgage Rate Drop

This week, mortgage rates dropped significantly and hit their lowest levels since February. There was a strong move in the bond market, which always have a direct effect on mortgage interest rates. Experts believe that the rate increases prior to July might have been a bit premature. The Federal Reserve was trying to get ahead of the next move based on economic predictions for this year.

Understanding the Economic Indicators

It’s easy to understand the thinking. Vaccinations have been slowing the spread of COVID-19. The economy is recovering rapidly. High inflation rates seem to be on the horizon, and inflation is usually not good for interest rates. Lastly, the Fed has made it clear they are looking to reduce rate-friendly bond-buying programs. This has driven rates upward the past few months. This week’s rate drop marked a major market correction as these economic indicators haven’t been as impactful as expected—at least not yet.

Plus, there are other variables in play that could jeopardize the country’s economic recovery. There is concern over the Delta variant of the virus as the vaccination rates continue to level off. High inflation expectations are being tempered. There is also plenty of buyer fatigue. Rising costs are slowing demand for major purchases like houses, stocks and vehicles. In real estate, the demand still dramatically outweighs the housing supply, but some buyers are getting frustrated by the ultra-competitive market. The rising rates, combined with increasing home prices, haven’t helped.

How Long Will This Rate Drop Last?

This latest rate drop should be a nice spark for the real estate and mortgage industries as it may re-motivate many buyers and facilitate easier home sales. The question is how long will this rate decrease last? There is always a chance they can drop a little more, or start going back up again soon.

For now, many mortgage lenders are able to offer rights in the high 2-percent range on top-tier conventional home purchase loans. Rates on home refinances, non-conventional and jumbo loans are naturally going to be a little higher, but still at historic lows. These rates give home buyers a lot of buying power, even in a market that is still considered a strong “seller’s market.”

If you are thinking about buying or refinancing soon, you will want to take advantage of these current low mortgage rates. Your best move will to get pre-approved for your home loan. This will let you know exactly how much you can afford and enable you to lock in the best possible rate.

To discuss your mortgage lending options in San Diego County and to get started on your pre-approval application, email me at or call Transparent Mortgage at (619) 701-3906.

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.