Rates have hit an all-time low at a 2.72% on a 30-year loan. That's the average across the US right now. And we've been seeing interest rates continue to decline over these past few months. Now on a 15 year again, record-breaking at 2.28%.
So let's talk about what does this actually means are the benefits and the downsides of this.
You're obviously saving money. If you get a lower interest rate, if you purchase a refinance now.
So we're seeing a 17 week run of rates below 3%. This is wild in the history of interest rates.
So obviously you can save more money. A lower interest rate means less interest that you pay over the life of the loan on a purchase or refinance. That's fantastic.
Saving more money on your refi. So currently, if you have a loan, even if you got a loan last a year, that might've been around 4%, you can now refinance that down to 2.72% on average. Now, this isn't for every single scenario, but it's going to be for most people sitting around that two to 3% range.
Now let's talk about why these rates are not, always great.
Number one is it's creating high competition in the market. Because rates are low, it's pushing more buyers out into the market and making it more difficult to get an accepted offer.
It's also making it incredibly difficult to save for a down payment because home prices are climbing up, meaning you have more money saved to have the same down payment that you did a year ago.
We're also seeing skyrocketing prices where people are overbidding because they have more spending power now with the cash that they have.
So this is a great transition into our sponsor, credible. So credible is a mortgage comparison website. You can go in there, fill it out. And they're going to do a soft credit poll and it only takes a couple of minutes and they're going to show you pre-qualified rates from different lenders, so you can compare and shop and see what's going to be best for you. And see if you can get close to the average interest rate in the US. So it's Credible Operations, Inc. NMLS 1681276. Not available in all states.
Now let's jump into a forecast here of what we're anticipating over the next few months and possibly the next year.
So the Federal Reserve has been buying bonds, to lower rates and prevent credit backup. So basically what's been happening in the federal reserve has been kind of artificially stimulating the economy through purchasing mortgage bonds. We're not gonna get into the complexity. The economics behind all of that, but just know that the federal reserve has been committed to keeping interest rates low over the next few years. So if you're seeing this 2.72 and thinking, oh my gosh, I have to purchase a refinance. Now just know that we're probably going to be seeing these interest rates for quite some time.
In fact, the Federal Reserve has said that they're going to keep the overnight lending rate as close to zero until 2023. Now the. Doesn't exactly correlate to mortgage rates, but it's a good indicator to see where the Fed's mindset is, where they're at right now is they're wanting to say, how do we make lending cheaper for everybody so that the economy gets stimulated, more purchases come through. And so that's our main goal here until 2023.
We're expecting rates to stay between 2% to 3.99%. So anywhere the twos and the threes expect rates to be there for a while. Honestly, I would expect them to be there for a couple of years. I don't anticipate rates are going to continue. Even in a much lower than they are right now on average. If they get super low then we might have a bigger economic problem, but I also don't anticipate they're going to skyrocket up anytime soon, especially with where the feds mine is at.
A big thing here is we're expecting correction especially with construction catching up with men. So right now there's crazy high demand. Meaning there aren't a lot of homes available and construction is not able to meet the demands of buyers. So as new construction is able to start slowly catching up with the demand and more inventory comes up. That means home prices are going to come back down to somewhat more affordable, ranges than they are currently right now.
There's also an expectation of the federal housing finance agency to extend forbearance relief. They haven't clarified exactly, but they said they are going to be watching COVID closely and changing their policies as needed. It's very big, but most people are anticipating for is going to be extended by another bill.
That's going to be passed. Obviously, it's possible that that could not happen. So I have to see what ends up happening there, but most people anticipate that forbearance relief is going to continue that way we won't see a wave of a foreclosure crisis.