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Boston Real Estate: Mortgage Rates Decline (How low can they go?)

Mortgage rates are one of several factors that impact how much you can afford if you’re buying a home. When rates are low, they help you get more house for your money. Within the last year, mortgage rates have hit the lowest point ever recorded, and they’ve hovered in the historic-low territory. But even over the past few weeks, rates have started to rise. This past week, the average 30-year fixed rate was 3.14%.

What does this mean if you’re thinking about making a move? Waiting until next year will cost you more in the long run. Here’s a look at what several experts project for mortgage rates going into 2022.

Freddie Mac:

“The average 30-year fixed-rate mortgage (FRM) is expected to be 3.0 percent in 2021 and 3.5 percent in 2022.”

Doug Duncan, Senior VP & Chief Economist, Fannie Mae:

“Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low and supportive of mortgage demand and affordability.” 

First American:

“Consensus forecasts predict that mortgage rates will hit 3.2 percent by the end of the year, and 3.7 percent by the end of 2022.”

If rates rise even a half-point percentage over the next year, it will impact what you pay each month over the life of your loan – and that can really add up. So, the reality is, as prices and mortgage rates rise, it will cost more to purchase a home.

As you can see from the quotes above, industry experts project rates will rise in the months ahead. Here’s a table that compares other expert views and gives an average of those projections:Experts Project Mortgage Rates Will Continue To Rise in 2022 | Simplifying The MarketWhether you’re thinking about buying your first home, moving up to your dream home, or downsizing because your needs have changed, purchasing before mortgage rates rise even higher will help you take advantage of today’s homebuying affordability. That could be just the game-changer you need to achieve your homeownership goals.

Boston Condos for Sale and the Bottom Line

If you’re thinking of buying or selling over the next year, it may be wise to make your move sooner rather than later – before mortgage rates climb higher.

 

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We are nearly at the halfway point of the year and all the predictions from the end of last year suggesting that interest rates would steadily increase and never again see the low rates of the pandemic have only just barely proven true. As of this week they have stayed below 3% for five out of the last six weeks for 30-year fixed-rate loans, reaching 2.95% based on the Freddie Mac weekly report. When we closed out 2020, rates were at 2.67% which was just one basis point higher than their lowest level on record from a few weeks earlier.

Real Estate Application have Increased

Applications to purchase a home have increased slightly over the past few weeks but buyers continue to be held back by a lack of affordable inventory. A survey of over 400 metropolitan areas in the U.S. conducted by Redfin showed the number of homes that sold over list price had nudged over 50% for the first time during the four-week period ending May 16. Other record highs the survey revealed include: 45% of homes had an offer accepted within one week of going on the market and the average sale-to-list price ratio reached 101.7%. The median sales price for homes also reached a record high of $352,975.

Boston Condos for Sale

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Boston Real Estate: Mortgage Rates

Mortgage interest rates are oh so low at least historically speaking and they will stay low next year or go even lower.  Low interest rates tend to drive Boston downtown real estate prices up a bit and lower the average MID (Mortgage interest rate tax deduction) 

Home buyers should always look at the big picture which I have to say is looking better all the time. Downtown Boston real estate buyers who can score an interest rate at say 2.5 – 3% may end up with Boston condo mortgage payments that are lower than Beacon Hill apartment rent and if they actually pay off their mortgage and stay in their homes they may have an asset to sell or a place to live without those pesky mortgage or rent payments. 

Boston Real Estate and the Bottom Line

However it might not be a good idea to buy this year if you think you will need to move in the next couple of years  Homeownership works best for those who can stay put.

If your looking to buy a Beacon Hill condo or a modern Boston Seaport condo for sale please contact us at 617-595-3712.

Boston Condos for Sale

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