Mortgage rates for 30-year terms slipped a bit lower on the first Monday of the new year, but mortgage experts are confident rate increases will arrive soon.
While 2021 ended with higher rates — 3.25 percent for a 30-year fixed term — on Monday morning they had fallen to 3.19 percent.
However, 20-year, 15-year, and 10-year fixed terms remained unchanged from the previous week:
- 20-year: 2.88 percent
- 15-year: 2.38 percent
- 10-year: 2.25 percent
December was a month of “volatile rates,” experts said, partly as a result of economic uncertainty from the new Covid variant, Omicron.
Most markets pushed ahead with optimism that Omicron wouldn’t be as large of a threat as scientists initially feared, and recent news suggests this could be the case.
The Wall Street Journal reported that Omicron’s generally less severe symptoms could provide more protection and quicken herd immunity.
If this ends up being true, many experts think the economy will bounce back stronger than ever — which means higher mortgage rates are almost certain.
Not all medical professionals agree with the optimistic prediction, though, due to fear of even worse variants emerging.
Some market experts are predicting continued rate volatility as new reports and information emerge.
But regardless of the Covid outcome, experts are suggesting homeowners and prospective homeowners act fast to lock in current rates.
Many experts are especially encouraging rate locks whether the borrower is planning to close in one week or two months, since rates have been fluctuating so heavily.
Rates should still remain historically favorable for the time being, which means there’s plenty of opportunity for an affordable home purchase or refinance.
Experts also caution to use market rates as a rough guide, because they currently are seeing “intraday swings,” where rates switch direction throughout the day.
As a result, accuracy isn’t as strong now as it is during more stable periods.
The best course of action, experts say, is to speak to a mortgage lender. Each lender will have a slightly different approach, and some may or may not follow daily rates.
Mortgage lenders can target the right borrowers by using their industry expertise to explain the current fluctuations, and supporting homeowners through these decisions.
Experts also advise homeowners to consider the factors influencing their best personal rate, including:
- Credit score
- Down payment amount
- Debt-to-income (DTI) ratio
The loan terms also affect rates and monthly payment amounts. An experienced lender can help borrowers achieve the best rate and terms for their lifestyle and goals.