As 2020 comes to an end, with many saying bring on 2021, it’s all about stimulus and vaccine hopes right now. The U.S. financial markets continue to await any headlines from D.C. and there is political pressure on both sides of Congress to get something done.

Mortgage rates were unchanged last week at 2.92% and remain near record lows, but what could the near-term future hold as we head into the new year where rates are concerned? Even with the recent rise in the U.S.10-year yield, home loan rates have continued to improve thanks to the Federal Reserve’s (the Fed) asset purchase program.

There is some concern that upward pressure in rates exists, and in addition to the market looking forward at vaccines and more stimulus, there is real asset inflation everywhere: materials, commodities, Stocks, and housing. With the Fed and incoming president looking to add even more stimulus, there could be more asset inflation and potentially some upward pressure on mortgage rates.

The good news is that should rates creep higher, the Fed will likely do even more to pin down long-term rates like measures such as QE and some sort of yield curve control.

Source: Mortgage Market Guide


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