What is the outlook for mortgage interest rates in 2021?
This is always a tough question, because there are so many factors that affect the mortgage bond market, which controls interest rates on a daily basis. However, most economists feel that rates will go UP to some degree in 2021. There are a few reasons for this :
With rates being near historic lows, there’s nowhere to go but up
The potential success of the COVID vaccine could get the country back near pre-COVID levels. Mainly, when the economy is doing better, mortgage rates suffer, as there is less reason to keep them low
The Fed Reserve has said that, if the economy does better, they will scale back MBS purchases, which have helped drive the mortgage bond market and interest rates
With one party controlling all 3 branches of government now, that has historically meant more government spending, since it’s easier to get bills passed. This would have a negative effect on the mortgage bond market
Even if rates do go up, economists are projecting for it to be closer to the low 3% range (generally in the high 2% range currently). So it is a very slim chance that we see rates “skyrocket” higher. It is also not a guarantee that rates will go up, either. As mentioned, there are several factors that go into determining if and when they do go higher.
The bottom line remains – if you’re considering buying a home this year, now is the time to do so. We know that rates are at near historic lows currently. What the future holds is much less known.