In 2019, there were a lot of predictions about what would happen to mortgage rates, and most of them were less than cheerful. Many people bet on an increase later in the year that was supposed to spell an end to close to a decade of historically low interest rates. Instead, changes to the Federal prime rate went differently than expected while the market did not change as much as predicted. As a result, mortgage rates continue to be among the lowest ever. Going into 2020, things really don’t look like they are changing anytime soon. In fact, many industry professionals expect them to decline by the end of the next year. Even among those who predict increases, they are modest. So what does that mean?
- No end to the long stretch of historically low rates
- It’s very unlikely we have found the lowest rates yet
- Predictions of lower rates may drive investment and speculation, it’s hard to tell this early
30-Year Rate Prediction Window
Everyone who makes predictions about mortgage rates, from residential bridge loan lenders to financing company executives, has a different way of weighing the factors that influence rate changes. Private lenders for real estate around the country position themselves according to their best understanding of the market, and if you are deciding whether it’s time to lock in a mortgage at this year’s rate, you need to know what they think is about to happen. Almost universally, experts predict early rates in 2020 will range between 3.15 and 3.7%, with many media outlets reporting an average prediction of 3.5 or 3.6%.
In addition to that, the experts who predict a mid-year decline are predicting a change of up to 0.30%. What does this mean? If you’re on the market for a new home and you’re not in a hurry, you could save substantially over the life of the loan in the back half of the year. On the other hand, if you stand to save money by purchasing a home and moving into it, the savings are not substantial enough to warrant that extra cost for several months if it would help you get to a better financial situation to move now. For those looking to purchase a fixer-upper, this prediction is the best news, because a purchase early in the year should be rehabbed and ready for a full mortgage right around the time the predictions of a slight decline are calling for it to hit.
Bridge Loan Options for Early Purchases
If you’re looking to purchase in the first half of the year but you want to wait to lock in the mortgage rates that are predicted to hit later in the year, you might want to look into hard money loans Los Angeles. By purchasing with a bridge loan option, you have the same advantages as someone looking to rehabilitate the property when it comes to buying time before you need long-term financing. At the same time, you can close on the property you want when you find it, instead of hoping to find another good fit when the rates change. It’s not like bridge loans are only given out for rehabilitation, after all. They’ve long been accepted as a fast way to close while you shop for the best long-term financing your credit can get you.