Recently, mortgage prices have started to increase in many market locations, some up to 3 months high. It is now worrying many homeowners and renters alike. But what is causing the mortgage prices to rise now during this time? And the price increase will continue to rise in the latter months of 2021?
Mortgage Prices Have Greatly Increased This Year, Some Amounting up To 3 Months Total
According to Realtor Magazine, there is a primary reason why the prices of many mortgages have suddenly increased this year. That said reason is due to the shortages in many supply chains around the country, which in result the rise of downstream inflation. Those turn of events resulted in the increase of said mortgage rates.
Even though the rates and prices of mortgages in January, however, both have still increased in the following month of February. At the latest report made on the 18th of February, the new record-high for mortgage rates has been recorded which are listed below:
- For 30-year mortgages with fixed rates, the highest recorded rate is 2.81%. Last year in the same month, the recorded rate of mortgage price increases was 3.49%.
- For 15-year mortgages with fixed rates, the highest recorded rate is 2.21%. The previous rate recorded last year for the rates of this kind of mortgage was 2.99%.
- For 5-year hybrid mortgages with adjustable rates, the highest recorded rate is 2.77%. The previous rate recorded last year for the rates of this kind of mortgage was 3.25%.
Even though the rates don't have 2 to 3 digit numbers in their increase, the numbers recorded are enough to worry many homeowners and renters alike in the country. But both parties will have an unexpected ally in form of a mortgage investor.
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Unexpected Ally of Both Homeowners and Renters Alike Against Mortgage Prices Increase
According to The Washington Post, a mortgage investor that is federally chartered named Freddie Mac is now pushing the aggregation of mortgage rates from 80 lenders nationwide. The said aggregation of mortgage rates is being pushed for the creation of weekly national average mortgage rates to overcome the said problem of individual mortgage rates and prices.
However, there is a downside to that aggregation that Mac is pushing through. The said downside for that is only available for individuals that have a strong and good credit score and have the financial ability for a large downpayment. That means that it will not be available for people who didn't meet those requirements.
Do take note that due to the fear of experiencing inflation in the upcoming future, many mortgage-backed securities and treasuries sold off their asses based on the expectation of the said inflation. Inflation is negatively known for being a bad factor for many bonds in the market, in which results into eroding the value of many fixed payments.
And having high inflation rates in the market can cause a negative domino effect overall, as it can possibly lead to many Federal Reserves to raise their rates significantly.
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