Key Highlights

  • Mortgage Bankers Association (MBA) forecasts mortgage rates at 3.4% by end of this year
  • Imbalance in housing supply and demand still high

Mortgage Bankers Association’s (MBA) Latest Forecast on Mortgage Rates Up to 3.4% by End of 2021

The Mortgage Bankers Association (MBA) announced its latest forecast on mortgage rates to CNBC’s “Squawk on the Street” on March 1.  MBA CEO Robert Broeksmit said that the MBA expects mortgage rates to hit 3.4% by the end of 2021. (In fact, mortgage rates broke the 3% threshold a day after Broeksmit’s prediction.)

Currently, mortgage rates for a 30-year fixed rate loan stands at 3.25% while a 15-year fixed rate mortgage comes in at 2.5%.

MBA Predicts Purchase Origination to Fall Slightly in 2021

Broeksmit said that it’s likely that mortgage originations will fall to approximately $3T by the end of 2021, down slightly from all-time highs in 2020.

Why this decline?   The imbalance in housing supply and demand continues.  Right now, for-sale inventory of existing homes stands at 1.5 months. Inventory of newly built homes “is progressing,” said Broeksmit but it will take years  for homebuilders to come back from the nearly decade’s long slack in homebuilding caused initially by the financial crisis in 2009.

Is the Refinancing Boom Over?

Asked on-air if everyone eligible for refinancing has already applied, Broeksmit said, “No.”  During the last week of February, refinance applications were +50% higher than the same week last year.

Forbearance Extended to 18-Month Period

Broeksmit reported that approximately 2.7M borrowers remain in forbearance of the 4.75M who originally participated in this program.

The Federal Housing Finance Agency (FHFA) representing home loans backed by Fannie Mae and Freddie Mac recently announced another extension of the forbearance program through June 2021.

For homeowners still unable to meet their monthly loan payments after the end of June, the Biden administration included $10B in homeowners’ assistance that will be allocated to states as part of the current COVID relief package.  The MBA was instrumental getting this inclusion into Biden’s plan.

Interest Rates and Home Prices Interrelated

Broeksmit acknowledged the interrelationship of mortgage interest rates, home prices and affordability.  As mortgage interest rates gradually climb to 3.4% by the end of 2021, it will be less easy for many homebuyers to maintain monthly financing costs as home prices continue to soar.  Broeksmit, however, maintained that even with the MBA’s forecasted gradual uptick in mortgage rates throughout 2021, the cost of financing would continue to remain historically low.


Thanks to CNBC’s “Squawk on the Street.”



Claim Your FREE Real Estate Treasure Map!