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The mortgage outlook

IS THE PANDEMIC AFFECTING THE MORTGAGE OUTLOOK

Mortgage rates have been low for a good while now, but is the pandemic affecting the mortgage outlook? In light of recent COVID increases, what can we expect a few months down the road? Some buyers are wondering what will happen to mortgage trends and how changes in the industry may affect plans for buying a home.

It’s normal to expect economic changes as a result of a pandemic, and while we’re not through it yet, we’re happy to see most sources suggest that the outlook is still positive.

MORTGAGE RATES DURING THE PANDEMIC’S PEAK

Mortgage rates remained low within the pandemic’s peak impact period, reaching its all-time low in January 2021. Those historic lows helped keep the mortgage market rolling amid the economic downturns of the pandemic, and rates have remained below 3.0%.

With loans so affordable, home-buying became extra desirable; many buyers rushed to relocate to single-family homes during lockdown, or to expand their homes to create space for remote offices. While that’s been particularly good news for home sellers, many buyers feel they’re getting a win too. Yes, home prices are up about 20% vs a year ago—but mortgage rates are for the life of your loan, so buyers are viewing this as a long-term positive!

WHAT’S ON THE HORIZON FOR MORTGAGE RATES?

Predictions are tricky things… but the general consensus is that while rates will begin to rise, mortgages will continue to be affordable well into 2022, largely because experts think that inflation trends are due to temporary factors like supply chain issues:

  • from Kiplinger: “The average rate for a 30-year mortgage is expected to rise to 3.3% by the end of 2021 and move up to 3.8% by the end of 2022.”
  • from Freddie Mac: “We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022… House price growth will also moderate in our forecast, averaging 6.6% nationally in 2021, slowing to 4.4% in 2022.”
  • from the Mortgage Bankers Association: Based on their Mortgage Finance Forecast, the average interest rate for a 30-year fixed mortgage loan is predicted to climb above 4% in 2022, perhaps landing at 4.3%by the end of next year.

A GOOD TIME TO BE BUYING IN THE RALEIGH AREA

Though supply hasn’t loosened up any here in the Raleigh area, we have a strong new-construction market, and Wake County is still more-affordable than many growing cities. The healthy job market, great quality of life, and low mortgage rates make it a good time to buy a home here!

The coronavirus pandemic continues to affect the mortgage industry, but the outlook is good. So if you’re planning to buy a home, take advantage of the low rates. And if you need help navigating your home buying or selling journey, just give us a call at Alexy Realty Group—we’ll help you get (or keep) the most value possible in your investment.

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