National average mortgage rates have continued to defy expectations in recent months. While they were originally projected to begin rising back toward pre-recession norms almost a year ago, that obviously hasn't happened. And now, even after months of mostly good economic news, there still hasn't been much of a change, as rates have hovered near some of the lowest levels ever observed in the housing market.
That, of course, is good news for those who are looking to obtain a mortgage today, at least in some ways. The most obvious benefit of mortgage rates staying this low for this long is that it brings significant affordability to would-be buyers and moreover allows the shrinking number of homeowners who have yet to refinance but can afford such a move to do so. In the case of the latter type of home loan, the general rule is that if people can cut their rates by half a percentage point – from 3.5 percent to 3 percent, for example – then a refinance likely makes sense for them. Statistics show that there are many people who haven't refinanced yet even though they would benefit in this way, but some can still afford such a step.
Lower rates both hurt and help buyers
Meanwhile, those who are looking to make a home purchase may be both helped considerably and impeded by the still-low rates in the market. The benefit, once again, is clear: They give shoppers low rates with home prices that, in many markets, still haven't surpassed pre-recession levels. This, in turn, could help consumers save tens of thousands of dollars over the lives of their loans in comparison with what they would have paid either prior to the recession or even a few months from now, depending on where they buy.
However, as long as rates are low, they're attractive for refinancers as well. This could leave potential hurdles that have lingered in the markets for years, because as long as refinance originations keep chugging along at a level similar to what's seen today, there's little reason for financial institutions to broaden credit access (and with it, risk) to accommodate more would-be buyers. Unfortunately, the only thing that will make refinances less attractive is rising rates, which will therefore hurt buyers' affordability as well.
How long will it last?
It's becoming more difficult for even the most seasoned of mortgage experts to predict when rates will actually start to rise once again. Predictions for these increases began rolling in around this time last year, and have been repeatedly pushed back since then. Now, even after positive economic news, rates rarely budge from the record lows near which they hover.
Those would-be buyers who are hopeful of getting into the market and making the most affordable purchase possible will therefore do well to ensure their credit standing is as strong as possible before they submit a mortgage application.
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