What Will Happen to Mortgage Rates in 2021? Experts Weigh In
Newsletter — April 2021
On the heels of the best year in history for the mortgage industry, mortgage rates inched up by about 50 basis points in the first quarter of this year. The rise has prompted industry professionals, homeowners, and aspiring homeowners alike to wonder: What will happen to mortgage rates in 2021?
The answer depends on a few factors:
One is how we handle the pandemic and vaccine rollout, and how that affects the economy. Another is whether the Federal Reserve stays the current course, keeping rates low.
The other is inflation. Now that Americans are receiving stimulus checks as part of the American Rescue Plan, some analysts foresee people rushing out to spend that money, causing prices for consumer goods and services to go up.
Still, mortgage rates remain low by historical standards, and while they are expected to increase somewhat, industry experts predict the demand for mortgages will remain strong in 2021. Here’s what some of them had to say:
Danielle Hale, Chief Economist at Realtor.com1:
“Our long-term view for mortgage rates in 2021 is higher, and they seem to be on course to move in that direction.... As the economic outlook strengthens, thanks to progress against coronavirus and vaccines plus a dose of stimulus from the government, this pushes up expectations for economic growth and inflation, driving long-term bond rates higher.”
Doug Duncan, Chief Economist at Fannie Mae2:
“Perspective is helpful here. While we forecast some continued upward movement, mortgage rates remain historically low, as they are still 0.8 percentage points below the 2019 average.”
Logan Mohtashami, Data Analyst at HousingWire1:
“Mortgage rates should rise as we are in the early stages of getting our economy working again. We are early in the vaccination process, and over the next 90 days, that data should get better.”
Mike Frantatoni, Chief Economist at the Mortgage Banker’s Association3:
“While mortgage rates are likely to move somewhat higher, the purchase market remains on track for a record year.”
Knowing what to expect — and planning accordingly — is important, and so is protecting your portfolio. Let Blue Streak Docs manage your document retrieval and property reports. If you haven’t worked with us yet, give us a try and get your 5th order FREE!
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