2 reasons mortgage rates could rise in 2021

Considering a mortgage refinance? Act now to save the most money. (iStock)

If you’re thinking about refinancing your home at the lowest rate possible, your window may be closing. The coronavirus pandemic has made refinancing your home more attractive — and affordable — but things could change quickly in the next few months.

To ensure you're getting low mortgage rates, get started on your refinancing application today. Multi-lender marketplace Credible can help you compare rates and mortgage lenders, walking you through the entire process completely remote. Fill out some simple questions and see if you can save money.

Mortgage rates have hit historic lows, thanks to actions by the Federal Reserve in March 2020 to help strengthen the economy amid the pandemic. Given this news, it's no surprise mortgage refinances are booming. Homeowners want to snag a better mortgage rate, mortgage loan term, and lower their monthly payment in the process.

However, the Federal Housing Finance Agency's new adverse market fee, which is equal to 0.5% of a total refinance loan has already made refinancing more expensive. As of Dec. 1, all consumers who refinance their mortgage loan with a balance of over $125,000 have to pay an additional fee. And this could be just the tip of the iceberg.

Will mortgage rates rise?

If you want to avoid even more costs (and headaches), then you may want to refinance your home now. Here are two reasons mortgage rates could rise soon:

  1. Economic recovery
  2. Distribution of COVID-19 vaccines

1. Economic recovery

Harvard Business Review is reporting that the global economy is recovering faster than anticipated. They speculate that at least part of the reason the economy is recovering so quickly is that many fears, including the next Great Depression, never happened. Additionally, while unemployment rates did increase, it’s lower than experts anticipated.

The housing market hardly suffered, with sales and listings remaining steady. While the Federal Reserve predicted that they would maintain their rates at near-zero rates through 2023, an improving economy could change this.

It’s crucial to work to qualify for the lowest mortgage rates possible. With Credible, you can find out your rate and estimated monthly payment within minutes. Plus, it's free!


2. Distribution of COVID-19 vaccines

The potential of a viable coronavirus vaccine did encourage a slight increase in mortgage rates the week after Pfizer and BioNTech announced on Nov. 18 their Phase 3 trial had concluded.  their the announcement. Now, as people in the United States are being administered the vaccine, it's likely that consumer and investor confidence will grow -- and mortgage rates could continue to rise with it.

While most financial experts agree that the Federal Reserve isn’t likely to raise baseline mortgage rates any time soon, mortgage rates could still move away from record lows over the next few weeks and months.

If a mortgage refinance is an option, take some time now to research so you can maximize your savings. Head to Credible to compare rates and loan options across multiple lenders with fewer forms to fill out.


Today's mortgage rates

At publication, here are the average mortgage rates for the following, according to Freddie Mac:

  • The average 30-year fixed-rate mortgage: 2.71%
  • The average 15-year fixed-rate mortgage: 2.26%

These low rates have enticed many homeowners into refinancing current mortgage loans for lower rates.

To decide what's best for you, it can be helpful to explore your mortgage options available based on today's rates. You can visit Credible to easily compare mortgages by rates and loan terms without affecting your credit score.


Should I refinance my mortgage?

Are you unsure if refinancing your home loan is the right decision? While lower interest rates could benefit many homeowners, a refinance may not be the best decision for some consumers.

There are three questions you should ask before signing the dotted line.

1. Are you planning to move? Homeowners who plan to stay in their current property for at least five years are likely to benefit the most from a refinance. You should aim to at least earn back the cost of the refinance in savings before relocating, and this can take several years, depending on how much money you save on your mortgage payment each month. As you consider your refinance, make sure to visit Credible to get in touch with experienced loan officers to get your mortgage questions answered.

2. How much time is left on your loan? If you only have a few years left on your mortgage, refinancing could cost you more money, or extend the amount of time you have left to pay on your loan. If you have less than 10 years on your current mortgage, take time to do the math. An online mortgage calculator can help you decide if refinancing into a 15-year fixed-rate mortgage is worth the cost.

3. How’s your credit? To qualify for the best interest rates available, you’ll need a healthy credit score. Lenders have tightened requirements as low interest rates have attracted more consumers. Before applying, consider lowering other debts and checking for any errors on your credit report that could affect your score. Want to see if you qualify? Head to Credible to get prequalified mortgage rates without impacting your credit score.


Deciding to refinance your home is a big decision. Using a site like Credible is a helpful way to make sure you’re ready when you decide to move forward. Credible allows you to view prequalified rates from multiple lenders in one spot. Visit Credible today to get started.