The interest rates are generous for home buyers, but the rate could change in the spring of 2021. This review discusses what you can expect from interest rates this spring and in the rest of 2021.
Reviewing where interest rates currently are
Mortgage rates are currently incredibly low. As of March 15th, the average interest rate for a 15-year fixed mortgage was 3.23% and the 30 year fixed mortgage rate 2.52%. The lower rates are sparked largely by the COVID-19 pandemic in an attempt to encourage home buying to boost the slowed real estate market. Many homeowners have taken advantage of this opportunity and were able to purchase their dream home at a buyer-friendly interest rate.
Our prediction: interest rates gradually rise in 2021
Most experts believe that the worst is behind us with COVID-19. Vaccines are now being distributed all across the country and the employment rate is starting to improve as well. This can lead to the interest rates beginning to increase as the spring of 2021 and the rest of the year arrives. In addition, the latest round of stimulus checks is likely to have an impact on the interest rates as well, and many real estate professionals expect a rise in the rate within the next few months. The 30 year fixed rate could jump to above 3.00% and continue to rise closer to four as the year progresses.
What increasing interest rates mean for home buyers
In the most straightforward sense, higher interest rates mean you pay more for your home than you otherwise would over the course of the 15 or 30-year mortgage. Of course, there are other factors that also play a major role in the overall cost of homes as well. Nevertheless, it is always recommended to take advantage of lower interest rates when the opportunity presents itself. Specifically, as it relates to 2021, the sooner you buy the better the chance you have of getting the lowest possible interest rate as the rate should gradually increase throughout the year.
What about home prices for 2021?
Many predict home prices to rise in 2021 as well. Rising home prices combined with increased interest rates could make affording a home purchase more challenging or lead to purchasing a home that is not as high-quality as you otherwise could. Currently, home prices are reasonable and the interest rate is low. The home prices should remain relatively stable throughout the Spring, but there is a good chance they start to rise in the summer. Overall, it is expected that home prices will rise around 3% in 2021, which is significant when combined with increasing interest rates.
Final thoughts
Although our outlook for the interest rates of 2021 is not for certain, many do expect both the interest rate and home prices to rise as the economy rebounds after the COVID-19 pandemic. Subsequently, it is encouraged to purchase a home in the spring of 2021 rather than later in the year.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129