Experts believe that the golden age of refinancing is coming to an end. A number of factors, including surging house values, COVID-19 migration, and low-interest rates, have combined to create a practically ideal scenario for homeowners seeking to refinance, as mortgage rates dipped below 2 per cent for the first time ever.

Though rates have gradually increased since then, they remain historically low. According to groups of economists, real estate experts, and mortgage sellers, this may soon change. “If you’re thinking about refinancing, do it now,” said Kimber White, past media president of the National Association of Mortgage Brokers.

Various economic trends converge to rattle the market as the Federal Reserve considers minimizing some stimulus programs and the US Treasury approaches the debt ceiling. If your mortgage rate is 3.5 per cent or higher, now it’s a great time to refinance at an all-time low refinance rate.

According to Joel Kan, economic and industry forecaster at the Mortgage Bankers Association, “our forecast is for rates to increase gradually over the next year, and we can expect an overall slowing in refinance activity as a result.” According to the MBA, the 30-year fixed-rate mortgage is expected to rise to 4 per cent by the end of 2022.

Below listed is an overview of some of the factors that could cause mortgage interest rates to rise, as well as why now is an excellent time to refinance.

• Flirting with the Debt Ceiling

According to a recent analysis from the Bipartisan Policy Center, the US Treasury is anticipated to default on its financial obligations sometime between Oct. 15 and Nov. 4 if Congress does not raise or suspend the debt ceiling swiftly. “If they don’t lift the debt ceiling, that’s going to crash the stock market and everything else,” White said.

• The Fed Starts to Taper

To counteract the economic effects of the COVID-19 pandemic, the Fed reduced interest rates and accelerated its purchasing of government-backed bonds. Since then, the Fed has been purchasing $40 billion in mortgage-backed bonds each month. When the Fed starts tapering it off, that’s most likely going to cause interest rates to go up.

• Inflation Drives Prices Up

The Consumer Price Index for goods and services in the United States was 5.3 per cent higher in September compared to the previous year. This is the highest increase since the 2008 US housing market crash.

Wrapping Up

The aforementioned confluence of factors shows that mortgage interest rates are on the rise. Experts forecast an overall increase in the upcoming months, even though it will likely be a sluggish, steady, and non-linear growth. Waiting too long to get the best deal could end up costing you money in the long run.