Earlier this week, we saw the biggest jump in mortgage rates in the past 2 months. The rates are still historically low by any standards, but this this quick jump upward just shows how volatile our market is during this pandemic. There is so much uncertainty in 2020. Fluctuating mortgage rates—in addition to tougher mortgage qualification standards—are just another unpredictable thing to watch this unusual year.
Rates on the Rise
Most lenders are still able to quote 30-year fixed mortgages under 3% for qualified conforming loan borrowers in good financial standing. However, early August has seen rates rise as fast as they’ve risen since early June. We’re talking at roughly an eighth of a point (0.125%) increase in average mortgage rates. To put that in perspective, that’s roughly a $20 a month increase on a $300,000 mortgage.
Here in San Diego, our home prices (and thus our mortgage loans) are much higher than average, so every fraction of a percentage point actually makes a big difference in the borrower’s buying power. Some borrowers may look to buy points or apply a larger down payment to keep rates and monthly mortgage payments lower. Some borrowers may feel this rate increase more on the upfront costs than in the long-term.
Is This a Sign of Things to Come?
Financial experts now wonder if this quick spike in mortgage rates is just the beginning of a major upward shift or if it’s just a blip on the radar as the market self-corrects. With the bond market also at historically low yields, that can eventually drive up mortgage rates as one trend directly affects the other. We’re probably a long way off from any huge mortgage rate spikes, but we could start to see a steady rise as the market works hard to recover from the economic toll that coronavirus has taken.
Nobody knows for sure what will happen with mortgage rates in the coming months, let alone by 2021. The best thing we can do is study current and past trends to understand how our market typically reacts. Unfortunately, 2020 is a year like no other most of us have ever experienced, so there are even more variables than usual.
Helping You Get More Out of Your Mortgage
At Transparent Mortgage, we will always be working hard to keep up with the latest mortgage trends and doing everything we can to help our clients make smart mortgage decisions. Whether rates are up or down, there are always reasons to buy real estate and there are always strategies we can use to get borrowers the most out of their home loans.
If you are looking to buy a home or refinance your loan while mortgage rates are still low, call us today at (619) 701-3906 or email me at firstname.lastname@example.org