What to Expect from Mortgage Rates in 2021

We all know that mortgage rates throughout the entire country were at historic lows throughout much of 2020 and they continue to be excellent. With the economic issues caused by the coronavirus pandemic, the mortgage market responded with lower and lower interest rates. This, combined with high buyer demand and low housing inventory, has kept the Atlanta real estate market moving faster than ever. 

Many home buyers and sellers are taking advantage of these unique market conditions. Even as home prices rise, the low interest rates still keep conventional mortgages very affordable for home buyers. Meanwhile, other homeowners are content to stay in their current home, with hopes of refinancing at lower mortgage rates that can reduce monthly mortgage payments and/or shorten the length of their loan.

So what is your best move going to be based on current mortgage rates in 2021? Let’s look at the key information you need to know. It’s very important to understand that mortgage rates can fluctuate bases on a wide variety of factors. Some of them include:

Size of the Mortgage Loan

“Conventional mortgages” (also known as “conforming mortgages”) fall within conforming loan amounts set by the Federal Housing Finance Agency (FHFA). For most counties in the US, the conforming loan limit (CLL) for 2021 is $548,250. 

Any local mortgage loan under this amount is considered “conventional” and can be backed (purchased) by government agencies, Fannie Mae or Freddie Mac. Any loan over that amount is considered a Jumbo Loan and will be subject to different mortgage rates and loan qualification standards because it presents much higher risks for the lender.

Borrower Qualification

Of course, your financial standing will impact how low of an interest rate you can lock in. We’re talking about credit scores, savings, financial history, employment situation and how much you are able to put toward your down payment. The better your loan qualification standards, the lower mortgage rate you’ll be able to get.

Treasury Yield and Other Market Factors

Mortgage rates are generally tied in directly to U.S. Treasury bond yields. As Treasury yields go up, so do mortgage rates. Mortgage loans are considered riskier investments by those who purchase these loans, so the bond prices will usually affect mortgage rates. There are other economic factors, stock market trends and current real estate market issues that can also affect current mortgage rates.

Mortgage Rates

As of this post, today’s average mortgage rates are:

  • 30-year fixed: 2.83%
  • 15-year fixed: 2.33%
  • 5/1 adjustable-rate mortgage (ARM): 2.34%

Please note that current mortgage rates change daily, so be sure and consult with your mortgage lender for today’s specific rates.

Locking in Your Best Mortgage Rate

Depending on these different factors, mortgage rates can change on a daily basis and be a little different for each borrower. This is why it is so important to work with a mortgage advisor you can trust to help you research all your home loan or refinance options and lock in the best possible mortgage rate when the timing is right. 

Though mortgage rates have been at historic lows for awhile now, the signs are pointing toward interest rates going up as 2021 progresses. We’ve already seen a couple slight bumps upward in January. As the economy starts to recover from the pandemic and the mortgage and real estate markets inevitably self-correct as they always do, we expect to see the rates gradually moving higher. There probably won’t be a sharp spike anytime this year, but likely a steady ascent. 

If you have been on the fence about buying or refinancing, or you have been waiting for Atlanta mortgage rates to be at their lowest before making your move, now is the time to act. It’s always best to lock in a good rate while you can!

For information on prevailing mortgage rates, and to get your new mortgage loan pre-approval or refinance application process started as soon as possible, contact the Moreira Team today!