Mortgage Advice

What to Expect from the Housing Market in 2021

Following a record year for the mortgage industry in 2020 with historically low interest rates, what can we expect in 2021? What is the potential impact of the new political administration and changing economic environment?

Mortgage interest rates truly have nowhere to go but up. While a rise in interest rates is inevitable, it should not be dramatic or prohibitive to refinances and home purchases. The Federal Reserve has indicated that it will continue to accommodate the U.S. economy as we recover from the pandemic though probably not as aggressively as was done during 2020. There will be slightly higher pressure on rates in 2021, but most economists insist that we should enjoy a range of high-2% to mid-3% on fixed-rate products. Mortgage refinances overall are anticipated to drop this year as many Americans have already taken advantage of record low rates and still others may have missed their window as the spread shrinks between their current rate and this year’s rising mortgage rates.

Home purchases are projected to rise, particularly in the second half of 2021 as the economy ticks back to life (with a return to dining, entertainment, travel, etc.). Many would-be homeowners have been stock-piling their capital over the last year with the absence of these disposable pleasures. Others, working from home, would like to keep the current arrangement with their employer, but seek to increase living space and other amenities such as a dedicated office as they are spending more time at home and the walls “seem to close in” on their current residence.  Home improvements, and therefore, home equity loans and lines of credit, are also likely to be robust for the same reasons.

It is widely believed that the seller’s market will continue this year with low inventory creating high levels of competition and rising home prices. Even so, Freddie Mac projects a 2.6% rise in home prices this year down from 5.5% in 2020. Median home prices today are $303,000 nationally, and the National Association of Realtors has suggested a negligible dip in the first quarter of 2021 to $297,000.

President Biden has indicated his administration’s support for many housing initiatives including first-time homebuyer down payment assistance and numerous community-related programs. Government regulation and oversight is expected to increase, along with potential protections against foreclosure and eviction. With 3.5 million Americans experiencing forbearance presently, a federal Homeowner Bill of Rights protecting those facing foreclosure would not be surprising in 2021.

Despite the overhanging pandemic and recent political tumult, the housing industry remains strong and mortgage interest rates should hover at or near historic lows. Best advice? For those seeking to purchase a home, obtain a preapproval to put yourself in an optimal position when competing against other offers and make sure you are teamed up with an experienced realtor. For those in the market to refinance, don’t delay; take advantage of depressed interest rates before they rise. For more information, contact Univest Home Loans at 877-723-5571 or


Univest Bank and Trust Co. is an Equal Housing Lender. NMLS #415882