The beginning of 2021 saw rates drop a bit – the average 30 yr fixed rate fell to about 2.625% according to Freddie Mac. But it was short lived. Rates started increasing and by January 14th, they had spiked to 2.79% according to Freddie Mac. So what will happen to mortgage rates for the rest of 2021?
Experts predict rates will continue to increase, but hopefully it will be minor. Rates may be in the mid 3% range by the end of the year.
So why are the rates going up? The quick answer is the economy is starting to have a more positive outlook on the post-Covid recovery. Coronavirus has been the major force keeping rates low over the past year. The closer we are to a widespread vaccination, the higher rates will go.
The current rate movements are partly due to the change in the political and economic situation in the United States. With President Biden discussing a $1.9 trillion stimulus plan, there is concern over spending and inflation. The stimulus plan could help with economic growth and that along with inflation will increase rates.
So how high could rates go in 2021? Major housing agencies are only predicting a small increase for 2021. Fannie Mae predicts rates will be about 2.8%, Freddie Mac says 3.0%. The National Association of Realtors says 3.2% and the Mortgage Bankers Association is predicting 3.3%. The Federal Reserve is projecting rates will stay low through 2023. What will actually happen? Who knows – we’ll know by the end of the year! In reality, rates are still really low!
So what does this mean for you? Are you thinking about refinancing your current loan? I would look at refinancing sooner than later just to get the lowest rate possible. There is always a chance that rates may dip again but you never know for sure. If the current rates benefit you, it makes sense to do it now. Are you thinking about buying a new home? Since rates will stay relatively low, it is a great time to buy but you need to consider your personal situation. Look at your credit score, your savings, the local real estate market and what your plans are. There are many factors that can affect your rate when you are buying – credit score is a big one.
Look at your situation and decide when you are ready. Talk to a loan officer and a realtor and you can plan for your own situation. That way you know what is best for you!
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
