2020 was an odd year for the mortgage industry. Instead of a market crash due to the pandemic and economic turmoil, home prices and sales actually rose. At the beginning, low-interest rates, low unemployment, and rising rents drove the housing market up. As the pandemic wore on, people fleeing urban areas, or looking for more space to work from home, plus historically low interest rates kept demand for housing high. The important question is, where will interest rates go now?

Industry experts expect mortgage rates to rise in 2021. If you are not planning to buy or sell in the coming year, then hopefully you have refinanced, or will soon. We strongly encourage those thinking about selling to list now. There are still many people looking to buy, but the market will be changing. No one can predict with certainty how high mortgage interest rates will go or when, but four top experts weighing in with their thoughts and rationale, giving us a pretty good glimpse of where we are headed in 2021.

The Wildcard Factors Affecting Mortgage Rates

How we deal with the ongoing pandemic, eventual recovery and the impact on the economy are some factors that affect rates and timing. But other factors, like the Federal Reserve’s desire to keep rates low, and inflation will also affect mortgage rates.

Experts Weigh In

Danielle Hale, Chief Economist at Realtor.com predicts low rates will continue through mid 2021, hovering around 3%. However, if access to the vaccine helps improve the economy, Hale believes mortgage rates could creep up to 3.4% by the end of the year. This increase could slow down demand for housing in late 2021, according to Hale.

Greg McBride, Chief Financial Analyst for Bankrate.com has a similar view to Hale, with perhaps a few more market fluctuations, up and down, in the first half of 2021. McBride sees a possibility rates will rise in the second half of the year as vaccinations roll out. However, keep an eye on the Federal Reserve. McBride thinks if the Fed purchases long-term bonds, that will either keep mortgage rates low or lower them further.

Lawrence Yun, Chief Economist with the National Association of Realtors takes a conservative view that mortgage rates will remain stable in 2021, though does say there is a potential for a slight increase from the all-time lows we saw in 2020. Yun also thinks it is important to keep an eye on the Federal Reserve, noting that the Fed has indicated they want to pursue this low interest rate policy over the next two or three years. Yun theorizes the Fed’s policy will help keep rates low in 2021.

Len Kiefer, Deputy Chief Economist With Freddie Mac expects rates to be flat throughout the next year, with a caveat. If the economy opens up, rates may go up too. Keep an eye on inflation- if it rises, expect mortgage rates to rise too.


Inflation is a measure of the rate of rising prices of goods and services in an economy. Inflation can occur when prices rise due to increases in production costs, such as wages or the cost of raw materials. A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.

There is much debate on factors that may, or may not, raise inflation. One issue that is the proposal to raise the minimum wage to $15 per hour over the next four years. Experts are split on whether this plan, if adopted, will increase inflation. You can read more about it in this Investopedia article.


If you’re considering a buying a home, you may not want to wait long, as most industry experts expect rates to rise in the second half of 2021. Why this is so important for buyers is the impact on what you will pay monthly. For a $300,000 30-year home loan, an increase from 2.75% to 4%, would increase your monthly payment over $200. Over the life of the loan, that extra interest would cost you an additional $74,880.

For sellers, an increase in mortgage interest rates could result in lower demand, which ultimately could affect list prices. Sale prices are always determined by what the market is willing to pay.


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