For the week of January 11th, 2021
Recap of last week: Rates slightly worse
Average mortgage rates remained low but were slightly worse ending the week, as Democrats won both Georgia Senate seats and control of the House, Senate, and Presidency.
Mortgage Rate Forecast: Rates likely to worsen
Average mortgage rates will likely get worse this week as markets anticipate much more fiscal stimulus to come when President-Elect Biden takes office. Now that Democrats have control of Congress, it makes it easier to roll out new fiscal stimulus plans with multi-trillion dollar price tags. The plans would be paid for with additional debt, pressuring Treasury yields higher and causing mortgage bonds to lose value, which would pressure mortgage rates to creep up higher.
What's affecting rates this week:
- Economic stimulus: The Fed continues to buy Treasuries and mortgage bonds, helping to keep rates low and generally stable, even in a rising rate environment.
- Economic data: Reports on inflation, as well as a couple of Treasury auctions, could put some pressure on mortgage rates this week.
- Economic recovery: With vaccine distribution, fiscal stimulus, and job creation in some sectors despite rising virus numbers, markets remain optimistic of the economic recovery, pressuring rates.
