Mortgage rates set to rise in November

As Thanksgiving approaches, homeowners and potential buyers alike have much to be thankful for, especially the relatively low mortgage rates that have persisted over the past few months. But all good things come to an end, and that could be true of record rates before long.

At the end of October, rates were on average 3.24% for the 30-year fixed-rate benchmark mortgage, while the 15-year fixed-rate home loan could be obtained, on average, at 2.49%, according to Bankrate’s national survey of lenders. Both levels were higher than a month earlier, adding credit to predictions by many experts that rates will continue to rise in the weeks to come.

Still, for those who buy low rates, the table may not be ready for disappointment. Borrowers keen to get a big deal on a purchase loan or refinance can still treat themselves to tempting mortgage rates.

Inflation is forcing the Fed’s hand

In recent weeks, US economic news has been mixed to disappointing. On the one hand, the labor market appears to be tightening: the number of people filing new claims for unemployment benefits recently fell to its lowest level in 19 months. On the other hand, for the second month in a row, the jobs report looked lackluster, with U.S. employers adding just 194,000 jobs in September, suggesting that the lingering coronavirus pandemic continues to hamper the recovery.

Adding even more pessimism to the overall outlook, the Biden administration’s proposals for infrastructure and other goals failed in Congress. Supply chain issues and inflation fears also persist. Add all of these factors together and it’s easy to see why many industry insiders don’t expect mortgage rate trends other than upward.

“With inflation high and the Federal Reserve starting to reduce its bond purchases, mortgage rates will continue to rise in the coming weeks,” said Greg McBride, chief financial analyst at Bankrate. “I expect 30-year rates to average between 3.25% and 3.5%, and 15-year rates in the neighborhood of 2.4% to 2.6% in November. “

Nadia Evangelou, senior economist and director of forecasting for the National Association of Realtors, anticipates similar trends.

“Mortgage rates will continue to rise,” she says.

Evangelou estimates that fixed rates at 30 and 15 years will average 3.2% and 2.45% respectively this month.

“I agree that the Fed will likely start to reduce the pace of its purchases of long-term Treasuries and mortgage-backed securities as early as next month,” she said. “This strategy will drive up rates as the consumer mortgages currently sold to Fannie Mae and Freddie Mac will have to find other buyers. The next Fed meeting in early November could determine the exact timing of the cut.

Chuck Biskobing, senior attorney at Cook & James in Atlanta, also sees rates continue to rise in November.

“Recent economic data on inflation and jobless claims has led the market to anticipate more aggressive Fed action going forward, which has resulted in higher 10-year Treasury rates,” Biskobing said. “This move, coupled with the Fed’s expectations to start scaling back its bond purchases, is expected to push mortgage interest rates up over the coming month, with average 30-year and 15-year rates reaching 3, respectively. , 3% and 2.5%. “

Mortgage rates for December and beyond

What can watchers expect once the turkey and all the trimmings have been swallowed up? Rates may climb a little higher, according to our panel.

“Consumer demand is expected to remain strong as concerns about rising prices over the next few months could further boost consumer activity as the holiday season approaches. This means that inflation will continue to be high, ”Evangelou said. “Therefore, I expect the 30-year fixed rate to average 3.3% and the 15-year fixed rate mortgage to average 2.55% for the remainder of the year.”

Biskobing has a hunch that inflation and employment figures will remain high in December, which could trigger additional market expectations for a Fed move.

“This will lead to further gains in the 10-year US Treasury rate and higher mortgage rates,” he said.

McBride is confident that inflation concerns will remain a priority throughout November and December, proving to be the main factor influencing mortgage rates through early 2022.

“But as we approach the end of 2021, the impact of these inflationary concerns on mortgage rates will be somewhat offset by concerns of slower economic growth next year,” he said. declared.

The large real estate groups reflect these rate forecasts when it comes to the 30-year fixed-rate benchmark mortgage. Expect rates to end at 3.1% on average by the end of 2021 and reach 3.3% by the end of the first quarter of 2022, according to the Mortgage Bankers Association. Meanwhile, in his latest rate forecast, Freddie Mac expects rates to average 3.0% for 2021 from 3.5% in 2022, while Fannie Mae believes we’ll see average rates. by 2.9% by the end of 2021 before climbing to 3.3%, on average, through next year.

Do not wait any longer for refi

Mortgage rates remain in very attractive territory for promising buyers as well as for those looking to refinance.

“Even with the recent increases in mortgage rates, they are still lower than anything seen before the summer of last year,” McBride said. “That’s why, if you haven’t refinanced yet, now is the time to act before this opportunity slips away. Especially with the cost of so many other things on the rise, the ability to significantly reduce your mortgage payments can create valuable wiggle room in your household budget.

Potential buyers might also want to act soon, suggests Evangelou.

“The outlook is for even higher rates in 2022. So, I would advise you to lock in now if you feel financially secure,” she says.

Also, think about the fact that house prices are likely to be higher next year.

“Higher rates and prices will mean less affordability overall, so if you’re planning to buy, it’s probably better now than waiting a lot longer,” Biskobing explains. “And if you currently have a mortgage with a rate over 3.75%, you should probably talk to lenders now about a refi.”

However, avoid making a decision hastily or prematurely.

“For potential buyers, making the biggest financial decision of your life under duress is not a recipe for success,” says McBride. “If you find yourself bidding to the limit of what you can afford, bidding out of the blue or after a five-minute visit, or being pressured to forgo a home inspection, you’d be doing probably better to go. There are worse things than staying where you are or renting for a year or two until you can buy in a more balanced, healthy market where you can do the necessary due diligence.

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