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Our economy was greatly impacted by the coronavirus in 2020. In March, the federal government started to impose lock downs and restrictions on just about every business. Businesses were closed, and every economic activity was jeopardized. The mortgage market was greatly affected in the months of March, April, and May.
High Demand in the Housing Market and Low Interest Rates
At the end of 2020, there was a boom in the mortgage market due to extremely low interest rates. The average 30-year fixed mortgage rate was down to 2.71%. That’s down from 3.68% in the year-ago period. An approximated 811,000 new homes were sold in 2020. This is 18.8 % above the 2019 figure of 683,000.
Because of high demand and the low mortgage rates, home prices increased dramatically. Mortgage experts believe the housing market will remain strong throughout 2021.
Low Inventory and Rising House Prices
With interest rates remaining low there continues to be a high demand for houses. This will continue to lead to low inventory over the coming months. The housing market will continue to remain strong throughout 2021. Mortgage rates have risen slightly in early January, but they are still historically low.
Some economists are forecasting that the interest rate in 2021 will break the 3% range but still, it will not go too much high expected rate can be 3.1%, 3.2%, or 3.3%. Due to this expected increase in interest rates we will see a decrease in how owners requesting to refinance.
Homeowners are Taking Advantage of Low Interest Rates and Refinancing
Existing home owners can take advantage of low interest rates if they are paying private mortgage insurance (PMI). For home buyers that did not put 20% down on their home and with homes increasing in value they might be able to refinance their PMI out of their mortgage. This can help homeowners save hundreds of dollars a month. It is best to speak to your local lender to see if refinancing PMI out of your mortgage is an option.
Equity probably won’t decrease through 2021.
Some people believe that home prices will keep going up this year, but the price increase will remain minimal. The expected rise in prices is approximately 3%. 2021 will continue to be a sellers market as long as interest rates continue to remain low.
Anchor Mortgage has low interest and refinance rates throughout the Carolina’s. To learn if refinancing or buying a house is right for you, contact us today. Dante Campanelli expert loan officer with Anchor Mortgage in Charleston, South Carolina will give you professional advice on refinancing, first time home buying, USDA loans, VA mortgages, and more. He can be reached directly at 843-367-9900 or Dante@anchormortgagellc.com