Will mortgage rates move up or down in July? 

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Experts see today’s record-low mortgage rates falling or remaining near the same levels in July 2020.

“As concerns about the spread of coronavirus increase, so do worries about the economic recovery,” says Greg McBride, chief financial analyst for Bankrate. “This will exert a downward pull on bond yields and mortgage rates.”

Indeed, mortgage rates have been falling since the pandemic began. The average yield on the benchmark 30-year fixed-rate mortgage dropped for the fifth consecutive week to yet another a record low, inching down to 3.35 percent, according to Bankrate’s weekly survey of large lenders.

That’s down significantly from just one year ago, when the average on a 30-year was 3.94 percent.

Even if rates don’t fall any further this month, it’s likely that they won’t rise either. Any anticipation that rates could inch up has largely vanished.

“Earlier in June there was the expectation that the economy would come roaring back as lock-down measures were eased, and rates started moving higher,” says Michael Becker, branch manager for Sierra Pacific Mortgage in White Marsh, Maryland. “But that has since reversed on the news of increasing cases of COVID-19 in many states that started to re-open.”

Becker expects rates to remain near their current levels for the month of July. “It’s hard for me to see rates dropping further since they are at all-time lows, but I don’t see them rising either,” he says.

What could cause mortgage rates to fall even more

Mortgage rates could fall this month if COVID-19 cases continue to get worse, says Logan Mohtashami, housing analyst for trade publication Housingwire.

But another indicator of where rates could go is the St. Louis Financial Stress Index, which measures the degree of financial stress in the markets. Mohtashami says that if the index — which had recovered to below zero (zero is normal) — starts to break out over 1.21 percent, we could see rates move down.

Of course, whether rates decline also depends on moves made by the Fed. “If domestic government spending policies change to less simulative, the bond market should view that negative,” says Mohtashami. That could also cause rates to drop.

Mortgage rates beyond July

Yields on mortgages could remain low well past July.

In fact, the Mortgage Bankers Association forecasts that interest rates will remain relatively flat throughout the rest of 2020 and even decline slightly in early 2021.

In the third and fourth quarter of 2020, the MBA puts the 30-year, fixed-rate mortgage remaining around 3.4 percent. It forecasts that rates could dip to 3.3 percent in the first quarter of 2021 and remain there through the second quarter.

Bankrate’s forecast from the coming 12 months can be found here.

Don’t wait for lower mortgage rates to act

Though there’s a chance that mortgage rates could fall this month, they’re already at historical lows. If you’re looking to buy or refinance a home, now is as good of a time as any.

Refinancing right now, depending on your current mortgage, could shave $100 or more off of your monthly payment. And you’ll pay just $443 per $100,000 borrowed per month in principal and interest on a 30-year fixed-rate loan at a 3.4 percent interest rate.

But keep in mind that even with record-low mortgage rates, it’s still important to shop around. Get quotes from multiple lenders in order to find the best deal possible.

Featured image by San Francisco Chronicle/Hearst Newspapers via Getty Images.

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