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This Week in Real Estate: Mortgage Rates 2021

This time of the year, we always discuss predictions for the remainder of the young year.  In real estate, the mortgage rates are the principal predictor of the year to come.  So, what will mortgage rates do in 2021?

Most of the experts predict that mortgage rates will rise throughout 2021.  According to Greg McBride, CFA, Bankrate chief financial analyst, rates could fall even further from the all-time lows of December 2020.  He expects rates to end 2021 at 3.1 percent, but he says there could be some dramatic swings throughout the year.

 “It will be an especially volatile year for mortgage rates, with fixed rates falling to even lower lows early in 2021 on economic concerns but rebounding in the back half of the year as widespread vaccinations lead to surprisingly strong surge of economic activity – and the inflation worries that come with it, “McBride says.

The National Association of Realtors expects mortgage rates to average 3.1 percent in 2021, up from 3 percent in 2020.  The Mortgage Bankers Association says rates will average 3.3 percent in 2021.

So, what does that mean for the industry?  Fewer refinances, but more purchases.  If the rate predictions prove accurate, the deluge of refinances that occurred in 2020 will slow significantly by the second half of 2020, says Michael Frantantoni, chief economist at the Mortgage Bankers Association.  According to Frantantoni, “we expect the refi volume is going to fall off pretty sharply, particularly in the second half of 2021 as the economy really finds its footing.”

Even though mortgage rates will rise enough to discourage refinancing, they will still remain low enough to  continue to make home buying attractive.  Frantantoni predicts record mortgage volumes in 2021.  “Even if mortgage rates are going to be high enough to curtail refi, they’re still going to be low enough to keep housing affordable,” Frantantoni says.

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Jim Landon has practiced real estate law since 2002 and has been involved in real estate investment and construction for most of his life. Jim’s practice focuses on real estate transactions and land use.

Jim represents individuals and privately and publicly held companies in the purchase, sale, leasing, financing, and development of real property. He also represents title insurance companies on commercial purchases and refinancing transactions, as well as providing third-party legal opinions regarding Delaware law related to Delaware entities.








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