Mortgage Bankers Association October 2020 Rate Forecast

Real Estate Broker/Owner with Hawaii Dream Realty LLC RB-19372

Mortgage Bankers Association October 2020 Rate Forecast

Waning Mortgage Forecast

The October 2020 forecast is consistent with the August 2020 forecast as the waning effects of the pandemic on the mortgage market and real estate market continue to hold except we now get a more long term glimpse at what the market may hold in the years ahead.  Before we jump into 2021 and 2022, the final quarter of 2020 has the forecasted average down one tenth of a point from the August 2020 forecast suggesting that the mortgage rates are expected to hold steady as we close out 2020.  Earlier in October, long term mortgage rates fell as the key 30-year loan reached a new all-time record low at 2.81 percent.  Of note, in 2020 the 30-year fixed rate mortgage reached all time lows on 10 separate occasions and the rate tumbled downward  from the 3.69 percent rate of October 2019. As we look forward, the forecast suggests some optimism for the mortgage market and real estate market.  A steady decline is forecast in 2021 with the average annual rate forecasted at a reasonable 3.3 percent.  The steady rise in mortgage rates is forecasted to persist through 2022 as the annual average rate increases to 3.6. At the moment, the mortgage rates remain favorable with intentions to stimulate demand by prospective homebuyers. However demand has remained constrained due to the economic hardship brought on by the pandemic and with a Presidential election looming, we can speculate a high degree of uncertainty with the forecast for 2021 and 2022.

Historical Perspective

The mortgage rate graph depicts a steady decline during the past 40 years. The graph was from a housing and economic recovery webinar presentation prepared for the Hawaii Association of Realtors by Dr. Paul Brewbaker, a respected and renown local economist. Click Here if you would like to view a full recording of the webinar.

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VA Home Loans

So what do these rates mean if you are seeking a Veteran's Assistance or VA home loan? VA home loan is a home loan guaranty program offered to Veterans, military service members and eligible surviving spouses. The rates one actually qualifies is based on several factors including the loan program, credit score and credit worthiness. The forecast rates are only intended to provide you with insight into what the market considers as the overall average rate for the given period. You must check with your financial institution to find out what rate you qualify and in some cases that rate may be lower than what you see forecast by Mortgage Bankers Association.

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Theresa Harden
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Comments (1)

Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Oct 25, 2020 03:25 AM