rates
DISCOUNTING THE PANDEMIC’S IMPACTS So-called “posted” mortgage rates—the ones banks use to flirt with would-be new customers and refinancers—are, as we all know, not what ends up on the contract. However, because information on posted mortgage rates is so widely available, they are often the rates cited to describe changes in the cost of borrowing (and by extension how purchasing power is affected). Of course, banks will typically offer discounted rates to consumers—rates that are, in some case, significantly lower than their posted counterparts. As these are the rates codified into mortgage contracts, they deserve more of our attention; alas, the window into the world of discounted rates is somewhat opaque.
However, we do know that on average discounted rates have fallen mightily since the beginning of 2020, going from an already- low 2.50% for the 5-year fixed to 1.39% most recently. For variables, they can be had for as little as 0.99%. They will not stay here forever. In fact, there is evidence they have already started to creep up. This will marginally negatively impact buyers’ collective psyche and their purchasing power—though it’s important to point out that we still live in a world of ultra-low interest rates and will for some time.
RATES ARE LOW BUT ARE SET TO GROW
3.50%
3.24%
3.00%
2.70%
2.50%
2.00%
1.50%
1.39%
1.00%
0.99%
0.50%
0.00%
YEAR VARIABLE
YEAR FIXED
DATA: DISCOUNT MORTGAGE RATES
SOURCE: RATEHUB
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