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Are mortgage rates moving up or down in August?



If you are considering getting a mortgage, you may be concerned that mortgage interest rates may rise in August after a sharp decline since the onset of the pandemic. The good news is that experts expect rates to remain in August 2020 or close to historical lows.



group of people on a dirt road in the woods: Mortgages in August


© Photo by Wolfgang Kaehler / LightRocket via Getty Images
Mortgage rates in August

“Mortgage rates are likely to remain at record lows until August and for the foreseeable future, given the weak economic environment. The uncertain nature of the coronavirus and the likelihood of a long-term economic recovery will keep the lid at mortgage rates, ”said Greg McBride, CFA, Chief Financial Analyst, Bankrate.

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Mortgage interest rates have continued their downward trend since the beginning of the COVID-19 crisis, which began months ago. The average yield on a reference 30-year fixed-rate mortgage fell to a new record low of 3.30 percent in the last week of July, based on a weekly survey by Bankrate’s main bankers. A year ago, the thirty year old was 3.97 percent. The average 30-year fixed rate per week is 0.67 percentage point below the 52-week high of 3.97%.

If mortgage rates are heading in August

Rates are unlikely to rise or fall in the near future.

“Although slight daily fluctuations can be expected, there should be a small change in the 30-year fixed mortgage rate in August. Persistent demand for 10-year government securities will be used to maintain interest rates – an anchor for long-term mortgage rates. hovering around plus or minus 3 percent, ”says Ken H. Johnson, a real estate economist at the Atlantic University of Florida in Boca Raton, Florida.

Logan Mohtashami, a senior analyst in Orange County, California, based at HousingWire, reflects these ideas.

“The ten-year yield refuses to break below 0.62 percent at any rate,” says Mohtashami. “However, we have two factors that can only lead to a reduction in rates: if government disaster relief is not large enough and if some recent economic gains are lost. If this second increase in coronavirus cases worsens, the 10-year yield will decrease. ‘ “

The longer our nation is without the effective COVID-19 vaccine, the more uncertain our economy will be and the more likely it is that rates will remain the same or fall even more.

“How we manage a pandemic will be a major factor from which mortgage rates will apply in the long run,” says Johnson. “When combining effective vaccines and treatments, the impact of the virus on the economy will be less, and if all conditions are the same, the rate should remain the same.”

Future elections could change things sooner than expected.

“I expect the 30-year rate to fall below 3 percent in August, as the election cycle will have enough traders nervous to see more money flows in bond-cutting bonds,” said Derek Egeberg, head of the Mortgage Academy branch. in Yume, Arizona. “I expect rates to remain lower until the end of the fourth quarter, until this year’s holiday income is reported and after the end of the election cycle.”

Mortgage rates after August

The Mortgage Bankers’ Association predicts that the 30-year fixed rate should remain relatively unchanged over the next five months, averaging 3.3 percent by 2020 and reaching 3.5 percent by 2021. Freddie Mac expects rates to remain low, falling to an annual average of 3.4% this year and 3.2% in 2021. Meanwhile, Fannie Mae expects rates to fall to 3.0% in the third and fourth quarters of 2020, and from now on decline to 2.8% per year.

Forecasts by the end of the year and by 2021, McBride believes that the evolution of mortgage rates will depend on how the economy moves, ongoing stimulus measures by the Federal Reserve and the outlook for inflation.

Act early on a new mortgage or refinancing, an expert advises

Egeberg believes that now is the best time to buy or refinance a house.

“As in the case of asking our grandparents why they didn’t buy more homes 50 years ago when prices were cheaper, our children will ask us about the ‘big drop in interest rates’ of 2020 and whether we were able to capitalize on these historic low rates, “he says.” This is the single biggest buying opportunity in our lives, as debts are available in the current interest rate environment. “

Before you rush to a decision, do your homework first; Divide the numbers and ensure you can afford monthly payments.

“Rather than timing your home to buy at low mortgage rates, it’s better to make sure your finances are in good shape before they start to fall,” says McBride. “Work to improve your credit score, pay off debt and increase your savings. With these steps, you will be better prepared for successful home ownership, regardless of whether your rate is 2.5% or 3.5%. ”

Photo: Wolfgang Kaehler / LightRocket via Getty Images.

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