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Mortgage Rates Expected to Rise Into the New Year

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Financing

Mortgage Rates Expected to Rise Into the New Year

Forecasters anticipate an upward trend for mortgages in the final weeks of 2021


November 29, 2021
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Mortgage rates will likely rise throughout December with a steep increase at the end of the month as bond traders sell their mortgage-backed securities before Christmas, reports NerdWallet. Rates will continue trending upward into 2022 as a result of high inflation, a rise in short-term interest rates, and strong hiring estimates.

After a year of low mortgage rates in 2020, a slow economic recovery pushed rates higher in the third quarter of 2021, an upward trend which market forecasters expect to carry over into the new year.

I expect mortgage rates to rise modestly in December, especially toward the end of the month.

As we approach the end of 2021, bond traders will cash out so they can take a few days off without worrying about having to react to abrupt price changes. When the traders sell their mortgage-backed securities just before Christmas, the prices will go down and yields will go up. Mortgage rates will follow yields on that upward trajectory.

In short, I think much of December's rate increase will happen in the last week or so of the year.

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