Mortgage Rates Rise to Start 2021

Mortgage rates increased this week, jumping in response to Tuesday’s senate runoff elections in Georgia.

The preliminary results of the two senate races, which gave the Democratic Party a majority in the upper chamber came as a surprise to many investors and pushed Treasury yields to their highest levels since the spring. The sharp uptick in bond yields helped mortgage reach their highest levels in more than a month. The swift increase in rates was a wakeup call, but the path forward for mortgage rates remains uncertain and largely dependent on the economy’s ability to improve. The first test of this will be Friday’s December jobs report, which many expect to show a modest improvement from November. Should the report fall short of expectations, this upward momentum in bond yields and in mortgage rates could slow – especially if it mirrors the December ADP private payrolls report which showed a monthly net job loss.

More broadly, mortgage rates remain very low by historic standards and should be kept in check by aggressive monetary policy measures which appear unlikely to stop anytime soon.

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