Here’s what experts say will happen to interest rates in 2021.
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Where are mortgage interest rates headed this year? In response to the distribution of COVID-19 vaccines and positive economic outlooks for the second half of the year, rates are expected to increase slightly in 2021. However, rates fell to an even lower mark earlier this month, with many homebuyers locking in rates between 2.2% and 2.9%!
The National Association of Realtors expects rates to float up to 3.1% on average, while the Mortgage Bankers Association sees them settling a little higher up at 3.3%. If rates follow either of these projected paths, it’s likely that the refinancing boom we experienced in 2020 will fall off a bit, as there won’t be as strong of an incentive for homeowners to refi. However, 3.3% is still low enough to motivate buyers nationwide; despite rising prices, purchasing power will still be stronger in 2021 than it’s been in years past.
Generally, an improving economy correlates with rising mortgage rates, and top economists and investors do foresee a rebound in the second half of 2021 (again, driven mainly by the distribution of vaccines). That said, the Federal Reserve will more than likely keep short-term rates low, and that, in turn, will allow us to keep our mortgage rates low through at least 2022.
Despite rising prices, purchasing power will still be stronger in 2021 than it’s been in years past.
If you’re curious to know what you can afford in today’s market with rates being as low as they are, give us a call. I’ll ask you what monthly mortgage payment you’d feel most comfortable with, then I’ll run the numbers to show you how much house you can actually afford. I’ve had plenty of potential buyers be really surprised by the real estate they’d be able to own at their current budget. Just reach out to us anytime; my team and I are always on standby, and we’d love to help you!