The Property Line: 5 Mortgage Trends for the Rest of 2021
This article was first published on NerdWallet.com.
It's brutal out here for home buyers in the second half of 2021. Mortgage rates will rise, home prices will keep going up and buyers will continue to face competition. Here are housing trends to watch for in the final months of the year.
Mortgage rates will likely rise
The 30-year fixed-rate mortgage will rise in the second half of 2021, according to the major forecasters.
Fannie Mae and Freddie Mac predict the rate will rise about two-tenths of a percentage point, the National Association of Realtors expects it to rise three-tenths of a percentage point, and the Mortgage Bankers Association forecasts an increase of half a percentage point.
When you average all of their forecasts, the consensus prediction is that the 30-year mortgage will average 3.38% in the last three months of 2021, up three-tenths of a percentage point from the second quarter's average rate of 3.08%.
I agree that mortgage rates will rise between a quarter and a half of a percentage point in the second half of the year as wages increase and the Federal Reserve starts talking about tightening monetary policy.
But I don't have a ton of confidence in this prediction because interest rates are volatile, and there's the possibility that the fight against the pandemic will take one step forward and three steps back. If a resurgence of COVID-19 slows the economy, mortgage rates could stay about the same or fall even lower.