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Many mortgage professionals and consumers have become complacent about mortgage interest rates given the low levels they reached and maintained in the second half of 2020, even though other indicators said rates should be rising.

Mortgage rates generally follow the 10-year Treasury rates closely and late last year and early in 2021 the benchmark 10-year Treasuries have spiked up off the lows of early 2020.  Mortgage rates are somewhat higher than at the end of 2020 and they have become much more volatile as we begin 2021.  What that means is that they have been moving in a wider range up and down, daily.  Although, at the time of this writing, are only slightly higher than the lows we saw in 2020.

COVID and its impacts on the economy remain the leading forces driving the economy and the bond markets but as a vaccine rolls out and COVID restrictions are relaxed, mortgage rates are likely to rise.  Additionally, following the Senate races in Georgia in early January, we saw one of the sharpest interest rate spikes of the past few years.  Although mortgage rates have fallen back to pre-January 5th levels, the 10-year Treasury rates have continued to rise.

As we move further into 2021 it is likely that mortgage interest rates will begin to rise moderately from the lows of 2020 and follow the 10-year Treasuries higher, barring anything unexpected.  For those looking to purchase or refinance in 2021, the first half of the year may be better as far as capturing today’s low mortgage rates.

One note to be aware of is that for the most part, interest rates that are reported in the press are reporting the prior week’s activity.  Often the headlines and stories are based on information that is old.  Mortgage rates could be substantially different in the current week from what the headlines reflect.