Mortgage rate increases can happen weekly or even daily, and so can a rate decline. Economic markers dictate when to raise interest rates and when they’re lowered, meaning the rates for mortgages are dependent on outside influences for when they fluctuate. Those who are actively shopping for a residential property and others who might be entertaining an entry into the real estate market are asking, “Are interest rates going up or staying relatively stable?”
Little room for rates to go down
At the moment, we’re sitting on near-historic lows for a rate on a 30-year fixed-rate mortgage term, according to Macro Trends. In a historical chart from the past 50 years, the current rate hovering at or just over 3%. That’s about one-third of one percent higher than the all-time low from December last year.
Since the federal reserve isn’t going to dip to 0% interest or negative interest rates, this is almost as low as borrowing rates can go. Rates have remained stable at this level for a little over one year now. Though no one can predict the future, it’s highly unlikely that rates will plummet any further.
Plenty of activity on the housing market
Though the housing market has cooled somewhat as home prices continue to climb, it’s still at a level well above a simmer. Between homeowners cashing in on home equity to first-time borrowers buying a home and real estate investors capitalizing on the incredibly low rates, it’s a race to lock up home purchases before the prices and the interest rates climb further.
Buyers with capital available and supporting income have been either taking advantage of even lower 15-year fixed rates to pay their home off faster, or they’ve been taking long-term mortgages like a 40-year loan with a 10-year interest-only period to use their money in ways that can earn them more than the interest they pay.
Economic stability commands higher interest rates
When the American economy is in a state of flux, interest rates take a short-term nosedive. When there’s serious disruption, it can cause a recession like the pandemic did or like war-time would (and historically, it did). But when the economy stabilizes, interest rates begin to steadily climb.
Roughly twice every decade, interest rates quickly jump between 1% and 1.5% in a year. By all the signs right now, that appears to be where the US economy is poised to go.
Not only do interest rates increase substantially – relatively speaking, of course – but access to lending constricts. That’s true for fixed-rate loans as much as it is for credit cards, requiring a strong credit score and access to stable income for any meaningful approval.
Interest rates are stable… for now
Are interest rates going up soon? It’s impossible to tell the future. Rates for borrowing, especially for highly qualified applicants, will only go lower if there’s a massive shakeup in the economy once again. But any further improvements among economic drivers will mean interest rates will climb, either steadily or suddenly.
If you’re among those who are entertaining a home purchase or you’re ready to pull the trigger now, get pre-approved now and lock in your rate. MBANC is the perfect solution for non-traditional income earners, jumbo loan applicants, real estate investors, and anyone else looking for a home purchase or mortgage refinance. Call today to speak with a mortgage analyst who can help you choose the right product for your needs.