With the new year underway, it is necessary to learn from our pasts. So, consider the current mortgage rate forecast 2021 as we move past 2020. Learn how to accelerate your closings and allow your mortgage business to thrive by also thinking about the future.
Educate yourself, and then pass that information onto your borrowers. So, learn how rates and industry information may shift in 2021.
What is currently happening with industry trends?
The mortgage rate forecast 2021 shows how home prices in the U.S. continue to rise. Normally, rising housing prices indicate overall low unemployment and increasing wages.
However, the coronavirus pandemic caused unemployment to increase. Also, it has altered the incomes of many Americans. The Fitch Ratings agency views home prices as overvalued by 10% or more in one-quarter of the country’s metropolitan areas. The most “overvalued” cities are Las Vegas and Austin.
Also, mortgage rates are already a percentage point less than they were a year ago. So, monthly principal and interest payments are lower than they were a year ago.
How will the pandemic affect the housing market and mortgage rate forecast 2021?
With 2020 behind us, looking at the mortgage rate forecast 2021 and trends that are likely to occur is necessary. First, exceptionally low mortgage rates are likely to be around for some time longer.
Also, supply is not necessarily meeting demand. Many houses are being sold almost as soon as they hit the market, mostly between 55-70 days. With the current 3% mortgage rate, a lot of houses are affordable. So, as long as rates are that low, people are going to continue going out and buying.
CoreLogic expects that 30-year fixed-rate loans will remain below 3% in the early portion of 2021. Also, they should average about 3.2% over the next three years. These low rates provide an opportunity for many families to buy or refinance homes.
There are still plenty of borrowers who will refinance this year. Mortgage originators can expect refinance volume to remain brisk, although slower than what we saw in 2020.
Also, millennials may substantially boost the demand for housing over the next few years. Looking at the U.S. population, the largest numbers of millennials in 2021 are those ages 29 to 31. The median age of recent first-time buyers is 33, the National Association of Realtors reported, so demographic forces will add an important increase to homebuying demand.
Why has the homeownership rate increased so much?
Workers in industries that are mostly unaffected by the pandemic may work remotely. Many have decided to purchase houses because of the sudden need for additional living and working space. Many also want to get out of the city. The trend shows people beginning to move away from high-density central business districts and high-rise residential properties.
Many of these decisions back by concerns about a second wave of pandemic-related restrictions. House hunters are leaving behind urban city living and instead looking in rural communities and even small towns.
Home Value Shifts
The pandemic has delayed some new-construction efforts and has led many prospective sellers to postpone listings. The median age of a homeowner is about 57. Plus, older Americans have greater health risks during the pandemic.
So, many who were contemplating selling their homes before 2020 have decided to wait. Once a vaccine is widely available, expect to see the number of new and existing homes listed for sale to rise, helping to ease price appreciation.
Low mortgage rates, a growing number of first-time buyers and gradually rising home values are all part of the mortgage rate forecast 2021. Keep on top of these trends so you are able to perform your best as a mortgage originator.
Provide your clients with this information as well, and keep them informed. After all, you are their trusted advisor, and they look to you for help!