For the week of January 25th, 2021
Recap of last week: Rates slightly improved
Average mortgage rates were slightly better for the week, improving steadily day-by-day despite a holiday shortened week. Rates were helped by a reduced likelihood that President Biden's $1.9tn stimulus would be passed soon, as lawmakers disagree on the immediacy and need for such a large spending package.
Mortgage Rate Forecast: Rates will remain low but could worsen slightly
Average mortgage rates will remain low this week, but could go up depending on what happens at this week's Fed meeting, and with this week's economic data.
What's affecting rates this week:
- Fed bond purchases: The Fed continues to buy Treasuries and mortgage bonds, helping to keep rates low and generally stable.
- Fed meeting: The Fed releases a statement on Wednesday, and markets will be listening for clues of when the Fed will start to reduce bond purchases.
- Economic data: A full calendar of data this week, we could see some reports influence rates.
- Bond pricing: Lenders set mortgage rates based on the pricing of mortgage bonds, which recovered last week after losing ground early in January. However, bonds may face technical resistance in improving further, leading to rates getting slightly worse this week.
