How to take Advantage of Low Interest Rates in 2021
Friday, January 22 CCCU
How to Take Advantage of Historically Low Interest Rates
Record-low interest basically means borrowing money is cheaper than ever. A lot of people are taking advantage of low mortgage rates
, but the money-saving opportunities don't end there. Some are exploring car loans, credit cards, and debt consolidation options too. Our Portland community credit union is here to help you figure out how you can take advantage of historically low interest rates in 2021.
What record-low interest rates mean for mortgages
In 2020, mortgage rates dipped to as low as 2.5%, with a yearly average of 2.66% on 30-year home loans. Those with very good or good credit scores (670 and above) can expect to get a rate below 3%. If your credit score is fair (600 to 669), you might be able to get a rate under 4%, which is substantially lower than even the best rates from the last few years.
A look back at mortgage interest rates over the decades
When you look at average mortgage rates on 30-year fixed-rate loans
from the last few decades, you can see how historic the current rates are. We broke it down in five-year intervals from 1975 through 2020 below.
Average 30-year mortgage rates in 2015 were notably low at 3.85%, yet still more than a full percentage point higher than in 2020. A difference of 1.19%
might not seem significant, but it can really add up throughout the life of a loan.
Locking in a low fixed rate can shave off hundreds of dollars
from your monthly mortgage payment. After 360 months (30 years), this saves you an incredible amount of money. For instance, $300 in savings per month adds up to over $100,000 over the course of 30 years.
Mortgage rates in 2021: What to expect
While we can't say for sure where mortgage rates will be through 2021, they're predicted to hover around 3%. The Federal Reserve has said it doesn't plan to increase rates again until the U.S. sees strong economic growth and a healthy unemployment rate.
With interest rates at a historic low, now is an excellent time to buy a house or refinance your current home. If you opt for a fixed-rate mortgage, you'll lock in a low rate
for the life of your loan.
What historically low interest rates mean for car loans
Fewer vehicles on the road is another byproduct of the pandemic. But if you're in the market for a new car, this might be a great time to get an auto loan
. Average interest rates for 60-month car loans are currently at 4.32%—a big drop from 2019's national average of 5.27%. Throughout the life of a loan, a lower rate can save you thousands of dollars.
What record-low interest rates mean for credit cards
In 2020, the national average for credit card interest was 16.05%. This is substantially lower than 2019's average of 17.3%. Credit cards are great for building credit, as long as you use them responsibly. This could be a good time to explore your options for opening a credit card.
If you already have a high-interest card and have better credit than when you first opened the account, you might be able to call your credit card company and ask for a lower rate. Another option is to transfer your balance to a new card
with a lower interest rate. With a credit card from CCCU, you can get an APR (annual percentage rate) as low as 7.9% with a 0% introductory period.
What historically low rates mean for debt consolidation
Speaking of balance transfers, historically low interest rates also present an opportunity for debt consolidation. If you have one or more high-interest accounts (including credit cards or loans), you might be able to transfer your balances onto a single low-interest account.
This would mean you only have to make one monthly payment. The main draw, however, is that you can save money on interest and ultimately pay off debt quicker
. CCCU offers low-interest personal loans and 0% balance transfer credit cards.
Low-interest loans and debt consolidation from our Portland credit union
If you want to take advantage of record-low interest rates in 2021, CCCU is here to help. Our Portland credit union offers home loans, credit cards, auto loans, and personal loans with rates even lower than the national averages.
Whether you're interested in buying your first house, refinancing your property, consolidating your debt, or funding a big purchase, our flexible lending options can accommodate your needs. Not only that, but we'll make sure you're saving the most money on interest.
Apply for lending today
or contact us to learn more about the benefits of borrowing from a credit union.