The low-mortgage interest rate boom of 2020 was a surprise silver lining to the COVID pandemic. Many took advantage of the sub-3% interest rates to refinance or purchase new homes. It was an exciting and busy time for the real estate and lending industry!
Inflation Contributing to Higher Rates
Now that there seems to be a light at the end of the tunnel with the pandemic, the economy is starting to see a comeback which is great news! However, higher market demand resulting in higher prices (inflation) is contributing to higher rates.
Hope for Lower Rates Again
So, what is the mortgage forecast moving forward? Are there any chances rates can return to sub-3% levels any time soon or will they continue to move much higher? Is there any hope? Absolutely! There’s always hope. According to MBS Live, “Rates only rise so much, so fast before the market corrects. While it’s impossible to know how the new realities of the pandemic will affect the normal time and scope of things it’s no less of a certainty.”
Jumbo Loans Are Back
During the pandemic, investors tightened up their cash so Jumbo loans were hard, if not impossible, to find. Lenders were worried about so many loans defaulting last year that they stopped lending on certain programs and Jumbo loans took a big hit. The good news is Jumbo lending is loosening up and getting back to pre-COVID frequency with some programs even offering as little as 10% down.
A Busy Year Ahead
The economy has a lot to look forward to as the pandemic comes to an end and life starts to get back to normal. Even with interest rates slowly on the rise, there is no doubt 2021 will still be a busy year for the mortgage industry!
Author Heidi Clayton is a loan officer at Direct Mortgage Corp. Contact her if you are interested in applying for a home mortgage or refinancing an existing loan.