Mortgage Rates Through 2021

The Wise Team Prediction


Judging on how the economy is going, with the slow rate of job returns, increased unemployment, and stimulus checks to the populace it’s pretty safe to say that mortgage rates will remain low through the year. The Fed is conservatively stating they’ll keep rates at or near 0%, which allows lenders to keep their rates low as well. Some analysts are predicting rates closing the 2021 at around 3-3.1%, matching the annual average of 2020.


Mortgage rates are still at historic lows, and don’t look to be rising anytime soon. We started 2020 with a rate of 3.62%, which quickly dropped as the coronavirus took hold of the economy and the world. December had rates at 2.68%, and not looking to budge much from there based on market trends.


Over time, however, rates will begin to rise. Fewer people are going to be refinancing their homes, and with less money velocity banks will begin to raise interest rates to compensate. This will have a dual effect of further reducing refis and rushing purchasers into the market before rates rise further. That’s where we’ll find a balance near 3% by year end.


This seems to be a happy median for the economy, allowing first-time homebuyers to feel confident in their ability to secure a home loan and for families to transition from their current living situation. With an unstable economy gripping 2021 from the start, it’ll be interesting to see how the housing market reacts to the increasing interest rates.


The past year saw historic lows in listings while prices continued to reach for new highs. Longmont, in particular, saw a huge increase in rentals, primarily in apartments in prime locations, but this didn’t stifle the overall housing market sales and revenue. With more new construction to be completed this year, and an ever growing population, increased rates may see a surge of homes entering the market. With the demand so high, homes will move quickly, and we’ll see a similar trend to 2020.


When you’re ready to buy a home in the Denver Metro Area, make sure you know all the aspects of the sale you’re about to engage.  If you’re ready and need some assistance, reach out to your local realtor: The Wise Team; or check in with your banking agent.