Mortgage News Where Are Rates Headed?
As the third quarter of 2021 kicks off, mortgage rates have retreated from recent highs due in part to softening economic data along with investors, both foreign and domestic, having a big appetite for U.S. government securities.
Yields around the globe are much lower than in the U.S., and investors are trying to get the most bang for their investing dollars.
In addition, the Federal Reserve continues to purchase mortgage bonds daily, and that is also helping to hold rates low. The 30-year fixed-rate mortgage hit an all-time low of 2.65% back in early January of this year but then started to increase as inflation fears hit the markets. It hit 3.18% on April 1st but has since moved lower and is hovering around 3%.
Currently, there are still over 10.1 million jobs available across the nation, a record high. Additionally, while fears of higher and sustained inflation are all over the place, the bond market is currently telling us the fears are misguided. If future inflation is to be higher and persistent, rates would already be creeping higher, not lower.
This does not mean it is clear sailing ahead for continued low rates. Over the next couple of months, the markets will be watching inflation and jobs data to determine when the Fed might start tapering bond purchases.
There are rumors amongst Wall Street that the Federal Reserve will start tapering mortgage bond purchases first, meaning they will gradually buy fewer bonds. When the Fed mentions they will start buying fewer, that may be the start to higher mortgage rates. The main reason is mounting pressure to start buying fewer bonds and ultimately stop buying them altogether, which means rates in the second half of 2021 are likely to be higher than they are right now.
Bottom line: Now is a great time to either purchase a home or refinance your existing mortgage and take advantage of low rates while you still can.
Source: Mortgage Market Guide