New forecasts indicate that high mortgage rates pose a real risk to delinquent borrowers

 

New forecasts indicate that high mortgage rates pose a real risk to delinquent borrowers.

Homeowners who have refinanced their mortgages — or recently bought homes — have significantly benefited from rates that have been below 3% for more than a year.

If you have already refinanced your home loan, you will likely be rewarded with lower monthly installments.

But for those who put off a checklist, one key takeaway should come from these closely watched predictions loud and clear: The longer you wait, the more likely you are to lose out on significant savings.

In the week ending October 15, total mortgage demand — including requests for refinancing and home purchases — fell 6.3% from the previous week, the Mortgage Bankers Association (MBA) reported Wednesday.

Applications for loans to buy homes are down 5%, while requests for refinancing are down 7% from the previous week and down 22% from the same week a year earlier.

"Refinancing orders fell for a fourth week as prices rose, bringing the refinancing index to its lowest level since July 2021," says Joel Kahn, vice president of forecast management at the MBA.

In the weekly survey of mortgage bankers, the average 30-year mortgage rate was 3.23% last week, the highest rate since April, Kahn says. The average 15-year mortgage - a popular loan among homeowners for refinancing - jumped to 2.54%, the highest level since July.

Even with the recent increases, mortgage rates are still historically low. But new reports indicate that it will continue to rise.

Forecasts predict significant rate increases.

Concept of financial interest rates and mortgage rates. Hand drew a wooden cube block on top with an uptrend percentage symbol.

Two separate reports expect average 30-year mortgage rates in the 3% average range next year.

Fannie Mae expects rates to average 3.3% in 2022, up from last month, when the company said 3.1% would be the usual rate for next year.

Why the change? Increased inflation and expected tightening of monetary policy from the Federal Reserve, says Fannie Mae.

Meanwhile, another new forecast, released by the Mortgage Bankers Association, has projected rates to average 4% in 2022.

As a result, the group says that demand for mortgages will fall, with refinancing likely to drop 62% next year. But orders are expected to grow 9% to hit a new record, with another bump scheduled in 2023.

How can you get the price as low as possible Family, debt, and financial problems? Young couple and wife do the paperwork together and calculate their expenses.

Despite expectations of higher rates, borrowing costs - today at least - are still lower than they were before COVID-19 hit.

Whether you're considering refinancing or buying a home, getting the cheapest mortgage rate possible requires a little work on your part. To get the process started, check rates from at least five lenders. Shopping is the most reliable way to get the best price in your area.8

If you qualify for refinancing, you could potentially save hundreds of dollars a month — money that could go into your credit card balances or pay off other high-interest debts.

But if you haven't made it that far yet, consider other ways to lower the cost of homeownership. Be sure to collect quotes from several insurance companies. You can find savings there as well.