June 2021 Mortgage Charge Predictions
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- Mortgage rates have been hovering near 3% for months and this trend should continue into June
- The high demand for housing and the low inventory have increased property prices and made it difficult for buyers to benefit from the low interest rates
- Those who haven’t refinanced themselves in recent years could save with today’s low interest rates
Borrowers should continue to have access to cheap interest rates in June, with many experts predicting mortgage rates to stay low this month – near 3%.
For the past six weeks, the average 30-year fixed-rate mortgage rate has stayed within a tight range, fluctuating between 2.94% and 3%, according to Freddie Mac. And in the weeks and months ahead, mortgage and refinance rates may not go far above these numbers, experts say.
And while current mortgage rates are above their all-time lows, if you look at mortgage rate history, they are still unusually low.
This is what experts expect mortgage rates in June 2021 to be.
Lindsey Piegza, chief economist at Stifel Financial
Courtesy Lindsey Piegza
Piegza does not see any major changes in mortgage rates outside of normal fluctuations in the near future. “The [Federal Reserve] has essentially set an upper limit and a lower limit for the tariffs. So I don’t see many opportunities for organic printing in one direction or the other, ”says Piegza. However, if inflation turns out to be higher than expected, the Federal Reserve is expected to take action to prevent interest rates from rising sharply. “There are certainly many opportunities for … short-term volatility,” says Piegza.
Overall, average mortgage rates are currently exceptionally low. “It’s a kind of hair-splitting between 3% or 3.25% or 3.50%. If you ask your parents or grandparents, they were very happy to receive a 15% mortgage, ”says Piegza. The Federal Reserve has announced that interest rates will stay low through 2023, so interest rates should remain cheap for consumers for the coming weeks and months.
Tian Liu, Chief Economist at Enact Mortgage Insurance
Courtesy of Tian Liu
We could face a bumpy road ahead on mortgage rates as the US and global economies embark on a slow recovery path. “2020 was chaotic. I think 2021 the recovery could also be chaotic, ”says Liu. Last month we had less than expected employment growth, but it cannot be ruled out that there will be better than expected employment growth from one month to the next. These bouts could affect mortgage rates, which should eventually rise along with a recovering economy.
But there are many factors that should work to keep prices down. In 2020, the volume of refinanced mortgages roughly doubled year-on-year to $ 2.6 trillion. With so many homeowners already refinancing, we are in a market where “lenders have to track borrowers to get the loans,” says Liu. This competition between mortgage lenders should keep interest rates lower in the short term.
Jon Bodan, President of the Perpetual Financial Group
Courtesy Jon Bodan
To understand what will happen to mortgage rates, Bodan suggests looking at the general economy and its impact on the government bond market, which has a huge impact on mortgage rates. As long as government bonds are hovering near their current levels, mortgage rates should do the same, says Bodan.
For now, there doesn’t seem to be anything that looks like it’s going to divert courses from their current flat rate. The recent shifts in bond and mortgage rates have not happened. “It’s just kind of hanging out,” says Bodan of the market. The currently low interest rates should therefore be available to borrowers for a little longer.
Erin Sykes, Licensed Real Estate Seller and Chief Economist at NestSeekers International
Courtesy Erin Sykes
In the months ahead, Sykes expects mortgage rates to remain relatively flat. “But I expect some kind of rate hike through September and October because [home] Prices are just getting out of hand, ”she says. So while buyers should still have access to affordable prices, rising home prices are making housing less affordable in many areas.
If there are signs of sustained rising inflation, interest rates could rise. But even if interest rates rise, they should still be low compared to historical mortgage rates. “On the whole, anything below 5% is a great rate,” says Sykes. The biggest hurdle for most potential homebuyers is likely to be low housing inventory, not higher mortgage rates.
Robert Frick, business economist with the Navy Federal Credit Union
Courtesy of Robert Frick
As the economy experiences ups and downs on its way to recovery, Frick believes anything could happen to mortgage rates. “There is increased volatility, so it is pretty impossible to predict interest rates within 10 or 20 basis points (0.10% to 0.20%) over the next month or two,” he says. There are more general trends that suggest rates are likely to remain low.
However, low prices don’t necessarily help home buyers right now. “The people who are currently focusing on mortgage rates are focusing on the wrong fact,” says Frick. “The problem right now is home availability.” The demand for living space has exceeded the supply. Builders find it difficult to close the gap because there is a lack of material and manpower.
What do the current mortgage rate trends mean for your home purchase or refinancing plans in June?
Prices have risen since the beginning of the year. Even if they go up in June, they should still be exceptionally low. And that’s good news for anyone looking to get refinancing.
If you haven’t refinanced in the past two years and you have good credit, you may be able to cut your interest rate by 1% or more. For a $ 350,000 30 year home loan, lowering the interest rate from 4% to 3% would cut your monthly payment by over $ 200.
Refinancing is not free. The upfront closing costs are usually 3% to 6% of the loan balance. So, you want to make sure that you hold your new loan on long enough to break even. If you save $ 200 every month and have $ 11,000 in closing costs, it will take you over 4 years to break even.
For anyone buying a home, the situation is more complicated. The savings potential at today’s low interest rates has been offset by skyrocketing home prices. The demand for housing has far exceeded supply as we enter the main season for home buying. As bidding wars become the norm, buyers have difficulty getting their bids accepted as homes sell at excessively high prices. Hence, it is important for home buyers to be patient and stay on budget while navigating this seller’s market.