2020 was a truly unprecedented year. With it behind us, let’s look ahead at several housing market trends that are likely in 2021 and beyond.
First, exceptionally low mortgage rates are likely to be around for an extended period. The Federal Reserve is expected to continue an accommodative monetary policy and keep the federal funds target below 0.25% through 2022.
This should ensure that initial rates on ARMs will remain low, and we also expect 30-year fixed-rate loans to remain below 3% during early 2021 and average about 3.1% during the next two years.
This would be a percentage point lower than the 4.1% average over the 2010 to 2019 decade. These low rates will provide an excellent opportunity for families with good credit to buy or refinance homes. Using CoreLogic TrueStandings data, we estimate that there will be about 20 million home mortgages outstanding at the start of 2021, with a contract interest rate of 4% or higher.
While some of these are less likely to refinance because they have a low balance, a recent delinquency or have been in forbearance, there are still plenty of borrowers who will refinance in 2021. Expect refinance volume to remain brisk, albeit less than in 2020.
Justin Malonson is the Founder of LyfeLoop a 16+ year tech innovator, investigative media researcher and host of the Freedom Not Control Podcast live on Voice America. Justin is a highly sought-after tech entrepreneur, industry speaker and winner of the coveted Business Achievement Awards “Top Digital Marketer” award. With 16+ years of demanding experience, Justin has worked with over 3,000 businesses including amazing clients such as Blue Cross Blue Shield Association, Sotheby’s International Realty, Duke University, White House Black Market,Tiffin Motorhomes, Bass Pro Shops and Beazer Homes USA.