Mortgage Rates on the Rise in 2021

The conforming 30 year fixed mortgage rates are going up probably going to level off between 3.25 and 3.75 which is a big jump from the mid 2’s we saw just a few weeks ago and everybody wants to know why?

The short answer? The economy is improving, and rates go down with a bad economy and rates go up with a good economy.

Now if you are kicking yourself and feel like you missed the boat on a refinance, fear not! We do have a completely complimentary rate watch feature and when we see a rally we will contact you if you like. Sign up for that here:

Market Forecast:

Back to the economy, we have hospitality, travel, and entertainment, hurting, or perhaps, completely devastated, but improving.

Remember when the Lock Down happened – that trip to the grocery store? The world was eerie and freaky and we thought we would be on lock down for a couple weeks or months. That is when all this money started going to Mortgage backed Securities and we saw those ultra-low rates. It’s a different world now. Things are looking a lot better. The Vaccine is here.

Unemployment remains high but with the vaccine rolling out, that can change. What is hurting in the economy right now is entertainment, travel, and hospitality, and who does not want to take a trip, go to a ball game or a movie or a concert or a restaurant? Pent up demand will have a huge bounce back.

Outside of those sectors as I am sure you are aware the economy has had some huge gains – take a look at the S&P from March where we see a huge drop at the beginning and then a really strong stock market as we have all witnessed.

Another reason it is happening now is we had congress tide up with the impeachment and now that that’s over it is full board stimulus and economy and rates started going up right after the impeachment. Now we have the Biden administration pushing a 1.9 Trillion dollar stimulus plan through congress. The Fed is going to continue to buy bonds however the reality is central banks around the world think it’s a big deal for inflation.

Also we are seeing:

  • Oil prices are going up, the world is demanding more oil as it opens.
  • Lumber costs are going up, the world is starting to build.
  • Things are going up in price and that is inflation.

What is confusing a lot of the general public is the fed telling the media they are keeping rates at zero. That the federal funds rate and not mortgage rates which are two entirely different animals. Watch our market forecast for more information on that:

And what’s confusing a lot of folks is the fed says rates are going to stay at zero but we have seen the fed funds rate at zero and mortgage rates at 5.125 – watch my market outlook –…

Rates are still historically low and there still is a lot of opportunity to consolidate debt buy a 2nd home or investment property.

So that’s what has happened in the last week – we will see what happens as the world opens up. Make sure you check out my market outlook for 2021 –…

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Garrick Werdmuller
(510) 282-5456