Most everyone connected to the home mortgage business expects interest rates to experience some movement in 2021. Will the rates increase or will they continue to set historically low records? Should you buy or refinance now or hold out for even lower rates? Leading housing agencies are expecting an average 30-year mortgage rate to hover around 3.0 percent. That is pretty incredible and if true this is the best news ever for homebuyers and refinancing homeowners next year. Low rates mean expanded buying power, cheaper monthly payments, and huge savings. However, no one knows for sure. There is always volatility in the mortgage market.

The interest rate that a potential homeowner receives is, as always, dependent on current financial markets, but also, as always, on your personal profile and how you have conducted your personal finances. If rates start to move upward, even by half of a percentage point, the record lows may still be available to those who have:

1. a credit score, FICO score, higher than 720

2. a down payment of at least 20 percent

3. a low debt-to-income ratio

4. a home price within the local Fannie Mae limits

Will the successful distribution of a COVID vaccine help or hurt interest rates? A safe and effective, widely distributed vaccine, as we are seeing now, could shake things up a bit in the mortgage world. Interest rates could quickly begin to rise as markets stabilize. Locking in a mortgage now is sound advice.

Will the presidential election affect mortgage rates? Although presidents don’t set policy, an economic tone is set that indirectly affects the rise and fall of rates.

We all have a lot of questions and can only guess until the economy is further into the new year of 2021. But, what we do know, right now, is that 30-year fixed rates have hit their lowest point ever. The Federal Reserve recently recommitted itself to keeping short-term interest rates near zero for the foreseeable future. Their interest rate policy which will help the economy can change in any month. With the Fed all in to support the economy, it has stated that it will tolerate inflation levels above 2 percent for a while. This promise means that it will not raise short-term rates even if inflation begins to pick up. But when the Fed will act to curb inflation, if it gets out of hand, is unknown.

So, even though we have solid facts and educated predictions, I am right back at my first sentence: some movement in mortgage interest rates will take place in 2021, but when, in which direction, and how much no one truly knows. For my business, I’m going to remain committed to encouraging homebuyers, and homeowners wanting to refinance, to go forward now without speculating on interest rates. My crystal ball, like most, is currently a little cloudy. But, we will survive!!

Season’s Greetings, Good Tidings and Cheer. Look forward, stay healthy, and to Heck with 2020!!

Jim Gay was a real-estate broker for 20 years and has been a financial consultant to Fortune 500 companies. He is currently a broker/owner of The Mortgage Place (986-9080) and can be reached at

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