Mortgage rates hit an all time low in 2020 – more than once!! It seemed like every month we were seeing new lows for mortgage rates. There are many that refinanced their homes – and some that refinanced early in 2020 that decided to look into refinancing a second time!! And for some it truly made sense! So what is going to happen in 2021??
Everyone expects rates to remain low in 2021, possibly into 2022. The Federal Reserve has said they plan to keep rates low but that is the rate that banks borrow from, not the actual mortgage interest rate. Here is a chart from Freddie Mac that shows the fed funds rate and the average 30 yr fixed rate over the past few years.
The Federal Reserve can influence rates, especially the past few years when they have been buying mortgage backed securities. Usually if the Fed has positive news in it’s press releases, mortgage rates tend to increase. This year economic news has been generally negative due to Covid. Because of that, mortgage rates have been declining.
For 2021, many experts expect mortgage rates to stay low. Many thought that Covid may become a thing of the past by the end of 2020, that isn’t happening, although the vaccines may help. Due to Covid, there are many businesses that are failing or close to it. This is affecting the economy and the economic recovery will not happen overnight. When we are in uncertain economic times, mortgage rates tend to do very well.
It appears that we will continue to see low rates – possibly even lower rates in early 2021- but you never know for sure!! Right now, it looks like we will continue on the path we are on – which means mortgage rates are fantastic and it’s a great time to think about buying or refinancing your home!! The strange thing for me is that almost every year about now, I have expected rates to increase the next year. This year I also expect them to increase to some extent but they could very well stay about where they are now!!
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
