2021 Predictions from the Mortgage Bankers Association

The MBA states, "Our expectation is that 2021 will most likely be a year of a continued, but slow economic recovery, with a modest rise in mortgage rates, and the stubborn, ongoing housing market conundrum of inadequate supply in relation to demand, and the many challenges that have slowed homebuilding will continue to push home prices higher."

The MBA is predicting that GDP growth of 3.1% next with inflation averaging 2.7% and the unemployment rate to average 6.8% for the year, down from 8.4% this year. If inflation were to average 2.7%, double the current rate, mortgage rates would rise I believe to close to 4%. But, I really doubt inflation will average over 2.5% next year.

The MBA is predicting that home price appreciation will slow from the near 8% recorded by the FHFA in the 3rd quarter year over year. But, they gave no reasons on why they are predicting this. Until we finally and effectively deal with the HUGE supply crisis we have been facing for several years I don't see home price appreciation slowing much unless mortgage rates hit 3.50%. And as I have written several times I am very afraid that The Biden Administration will worsen the supply crisis we face. Finally, this is one area that I was really disappointed with The Trump Administration as I was hoping he would tackle this problem.