In Why paying off your mortgage isn’t necessarily a given (Washington Post, 1/4/2021 via Apple News), Justin Pierce explains why it’s a great time to get a mortgage (or refinance your existing mortgage):
Today, the average interest on a 30-year mortgage sits below 3 percent per year. At these low interest rates, this debate is all but settled. If your home mortgage is near 3 percent, then I have to tell you, that’s as close to free money as you’re ever going to get. This is especially true if you’re still able to write off your mortgage interest.
Another point to add is that when a mortgage’s interest rate is below inflation, borrowers will pay back the mortgage with cheaper dollars – possibly “free money.” With inflation likely to rise,1 it makes sense to lock in a long-term, fixed mortgage at today’s historically low mortgage interest rates.
See, e.g., Stephen Gandel, Federal Reserve says inflation should rise dramatically (CBS News, 8/27/2020); Ann Logue, Inflation Is on the Way for 2021 – Here’s What That Means for You (Yahoo Finance, 12/13/2020); and Mike O’Sullivan, Inflation Might Be The Most Important Market Factor in 2021 (Forbes, 12/29/2020). ↩