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Which Way Are Mortgage Rates Going?



Will Mortgage Rates Continue to Fall This Month?

December 2, 2020


Mortgage rates have hit new record lows 13 times this year, the latest in November. But will the downward trend continue this month?


Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®, believes rates will continue to hover near record lows, with the 30-year fixed-rate mortgage averaging around 2.9% for the month of December. “With the holiday shopping season around the corner, I expect employment to continue to improve and consumer spending to rise—especially as people will spend more time shopping around the internet, boosting e-commerce sales,” Evangelou says. “In the meantime, these ultra-low mortgage rates will continue to boost homebuying and homebuilding activity.”


Existing-home sales increased nearly 27% year over year in October , according to NAR data.


Low mortgage rates help home buyers offset some of the financial burden of rising home prices. Current homeowners are unlocking savings, too. A record number of homeowners are eligible to refinance into a lower mortgage rate, saving an average of $309 per month, according to new research from Black Knight.


“While there is great excitement about vaccines becoming reality in the months ahead, the virus is currently raging more than ever, and there is no sign of more stimulus,” says Greg McBride, chief financial analyst at Bankrate. “These are immediate risks to the economic recovery and will keep mortgage rates in check through the end of the year.”


As for 2021, economists mostly predict that mortgage rates will remain low, though they may tick up slightly. Evangelou predicts that rates won’t go above 3.1% in the first quarter of next year.


Other real estate organizations also are predicting low rates to stick around. Fannie Mae predicts the 30-year fixed-rate mortgage will average about 2.8% through the end of next year. The Mortgage Bankers Association predicts a 2.9% average in December and a 3.3% average for 2021. Freddie Mac predicts an average of 3% over the next 13 months.


Evangelou says home buyers should lock in the low mortgage rates now if they can. “However, for buyers who are not financially ready yet to purchase, rest assured that mortgage rates are expected to stay historically low for a long time, since the Fed will allow inflation to run above 2% for a while without raising rates,” she told Bankrate.

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