Evans Realty Blog
Evans Realty was established in 1985 and servicing the Treasure Valley for the past 36 years.
The Reason Mortgage Rates Are Projected to Increase and What It Means for You

The Reason Mortgage Rates Are Projected to Increase and What It Means for You

We’re currently experiencing historically low mortgage rates. Over the last fifty years, the average on a Freddie Mac 30-year fixed-rate mortgage has been 7.76%. Today, that rate is 2.81%. Flocks of homebuyers have been taking advantage of these remarkably low rates over the last twelve months. However, there’s no guarantee rates will remain this low much longer.

Whenever we try to forecast mortgage rates, we should consider the advice of Mark Fleming, Chief Economist at First American:

“You know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and/or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”

Many things impact mortgage rates. The economy, inflation, and Fed policy, just to name a few. That makes forecasting rates difficult. However, there’s one metric that has held up over the last fifty years – the relationship between mortgage rates and the 10-year treasury rate. Here’s a graph detailing this relationship since Freddie Mac started keeping mortgage rate records in 1972:The Reason Mortgage Rates Are Projected to Increase and What It Means for You | Keeping Current MattersThere’s no denying the close relationship between the two. Over the last five decades, there’s been an average 1.7-point spread between these two rates. It’s this long-term relationship that has some forecasters projecting an increase in mortgage rates as we move throughout the year. This is based on the recent surge in the 10-year treasury rate shown here:The Reason Mortgage Rates Are Projected to Increase and What It Means for You | Keeping Current MattersThe spread between the two is now 1.53, indicating mortgage rates could rise. Actually, a bump-up in rate has already begun. As Joel Kan, Associate VP of Economic Forecasting for the Mortgage Bankers Association, reveals:

“Expectations of faster economic growth and inflation continue to push Treasury yields & mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, & last week climbed to its highest level since Nov 2020.”

How high might they go in 2021?

No one knows for sure. Sam Khater, Chief Economist for Freddie Mac, recently suggested:

“While there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3% range for the year.”

What does this mean for you?

Whether you’re a first-time buyer or you’ve purchased a home before, even an increase of half a point in mortgage rate (2.81 to 3.31%) makes a big difference. On a $300,000 mortgage, that difference (including principal and interest) is $82 a month, $984 a year, or a total of $29,520 over the life of the home loan.

Bottom Line

Based on the 50-year symbiotic relationship between treasury rates and mortgage rates, it appears mortgage rates could be headed up this year. It may make sense to buy now rather than wait.

Tips to Get Your Home SOLD!

Many homeowners have already started looking into the prospect of selling their home on this fresh market. It’s always a good idea to take a look down the road and plan early for this transition before it’s time to make the move…and of course, when you sell you want to get the most back for your investment.

Good news! We’ve put together 3 renovations that will help you not only get that home sold FAST but also likely for even MORE in your pocket…

PAINT!
There’s nothing quite like some fresh color to breathe new life into things! You will be amazed at how this most simple of changes can make a big impact. You can certainly do this on your own and save a few bucks but it never hurts to at least check into a professional painter – they’ll have insight into the latest color trends and more.

The Master Bath…Or Shower!
A dark, drab bathroom is no way to show things off; considering the large amount of time we will spend in this room over the years it really makes sense that you want it to look nice. This can be as easily done as some fresh paint and fixtures or all new cabinets and tiles – a little goes a long way!

Quartz Counter Tops
Quartz has been a hot trend for a few years and this year it’s tops! This material is a great choice as it is strong, durable, as well as easy to maintain. New styles of quartz are even able to mimic the patterns and textures of marble for an extra rich detail. Even if you don’t go quartz you may want to redo your counter tops if they’re looking outdated. The kitchen after all is one of the other rooms we spend most of our time in!

Don’t know where to start? Know you need to sell your home but feel completely lost? Don’t Panic! We can help – just get in touch!

Winter Home Tips!

Believe it or not Winter is in full swing! While we've had a relatively mild season in Idaho so far that doesn't mean that this isn't still the coldest part of the year, and we've still got a few months left. That being the case it's also the time of year when home energy costs can be the highest; so it's important to keep an eye on things around the house in order to keep from having a unhappy surprise in your power bill.

We've put together just a few tips to help you stay cozy this Winter and keep costs low too!

Lower The Temp
Set that thermostat to 68. Yes, 68. It might be a littler cooler than you are used to but you can always bundle up. Keeping the temperature a little lower will of course cause the heater to run less.

Change Your Filters
Your home air filters can have a huge effect on how well your air systems work. Having a dirty filter can cause your heating system to run as much as 20% less efficient. Keeping those filters fresh will also help keep you healthier!

Patch Drafts
Check windows and doors for air leaks! Patch up any leaky spots to help prevent cold drafts from seeping in and stealing away your warm air.

These three tips can help you save a bundle this Winter!
We want to be on your team long after the purchase or sale of your Idaho home; that's one reason why we love being able to provide helpful information for homeowners year round. We would love to talk more with you about your new year - get in touch!

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