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(That’s about where it was last year, on average.) Over the horizon, they expect 30-year mortgage rates to average 4.9% in 2020. The chart below shows average 30-year mortgage rates during the 12-month period from February 2018 to February 2019. This chart was published around the same time as the group’s long-range mortgage forecast. You could spend all the time in the world researching interest rates, supply and demand, and professional housing market forecasts, but there’s one factor that’s more important than any of that – you. Trulia’s Inventory and Price Watch report for Q1 of 2019 saw starter home inventory actually rise 3.5% year over year, which is good news for first-time buyers.
That means that there are more buyers than there are homes for sale, giving sellers more power to negotiate. On that same $200, year fixed-rate mortgage, you’re now paying 4.1% interest. That brings your monthly payments up to $966.40 and your total payment over 30 years up to $347,902.83. At the end of 2018, mortgage interest rates were peaking close to 5%. Although it remains a seller’s market, sellers will need to be mindful of their increasing competition and shouldn’t necessarily expect to name their price and get it in full — a change from the past few years.
Starter Home or Dream Home?
While this inventory growth won’t push prices down in every market, there’s certainly a chance it could help in certain ones. In the majority of markets, the number of homes being put on the market or newly constructed has increased slightly, while the pace of sales has slowed slightly, which has helped stop the inventory decline. But the inventory increases or slowing price increases necessary for a more widespread sales gain are not forecasted to happen in 2019. While the situation is not getting worse for buyers, it’s also not improving notably in the majority of markets. It can be tricky to time any market, and mortgage rates are no exception. If conditions are choppy, and interest rates are likely to at least stay the same, if not rise, it may be smart to lock in a rate that works with your budget and seems fair to you.
The average mortgage rate for a 30-year fixed is 6.60%, more than double its 3.22% level at the start of the year. While some experts say they’re hopeful that interest rates won’t rise further this year, others say the increases will likely continue into early 2023 until inflation is under control. "Mortgage rate predictions should be used as one consideration in making a home purchase or refinance decision," Sharga suggests. There's no single thing that drives them up or down, Sharga says. Then we have Trulia’s forecast, which sees mortgage rates hitting 10-year highs in 2019.
Prediction for Stocks
Even if all of the nation’s top economists came together and said that 2019 was the best year for buyers since 2012, it wouldn’t be wise to buy a home if you weren’t in the right financial position to do so. That’s because the economy is cyclical, going back and forth between periods of expansion and contraction . Do your research and talk with real estate agents who know your local market – they’ll have the best idea of what’s to come. Robin Rothstein is a mortgage and housing writer at Forbes Advisor US. Prior to this, Robin was a contractor with SoFi, where she wrote mortgage content.
On the other hand, if you purchase a starter home just before prices plummet, you could become stuck in your less-than-ideal home, unable to upgrade. Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory is focused in the mid-to higher-end price tier, not entry-level. Rising mortgage rates and prices will keep a lot of new inventory out of their budget and make it especially tough for first time home buyers. As mentioned earlier, their forecast for 30-year fixed mortgage rates suggests that they’ll average around 4.6% in 2019. Over the horizon, they expect long-term mortgage rates to average 4.9% in 2020.
Zillow 2019 Mortgage Rate Forecast
As always, I compile predictions and data from the leading mortgage and real estate industry groups to come up with the annual forecast. The 10-year Treasury Note which has a direct co-relation with mortgage rates will trade between 2.55% and 3.00% for most of the year. There are many options in the mortgage marketplace for you to choose from. In addition to 30-year fixed loans, there are a plethora of shorter-term loans (i.e., 15-year) and also Adjustable Rate Mortgages available. Some mortgage shoppers might be lamenting the good ol’ days of sub-4% fixed rates. It is true that the market got crazy low for quite a period of time.
Early in 2019, they expect the 30-year fixed to average between 4.9% and 5%, before rising slightly to 5.2% in the third quarter and then 5.3% by yearend. Brother Freddie has slightly higher mortgage rate estimates for 2019, though they still appear favorable to all. Interestingly, they lowered their numbers from a month earlier in light of the recent economic developments. That’s great news for home buyers who are already contending with higher asking prices that seem to be eating into purchasing power. Stock stabilization will hurt rates – Stocks and bonds usually go in opposite directions.
What are mortgage rates?
In general, the higher your credit score, the better your rate will be. To get an idea of where you stand, check your credit before you apply and dispute any errors with the appropriate credit bureau to potentially boost your score. You’ll also want to consider how long you plan on staying in your home as the closing costs can eat up your savings if you sell shortly after refinancing. The closing costs to refinance run between 2% to 5% of the loan amount, depending on the lender. So you should plan on keeping your home long enough to cover those costs and realize the savings from refinancing at a lower rate.
These trends represent a great opportunity for borrowers who are planning to purchase or refinance a home in 2019. Home buyers, in particular, could capitalize on this by locking in a low rate for the long-term. This would essentially shield them from any mortgage rate increases that occur later in 2019, or beyond. Any student knows it can be constructive to look back and review your grades from the past year or semester. But the actual mortgage rates we got in 2019 were, in most cases, a lot lower than expected. The housing market forecast can play a big role in this decision – if housing prices are expected to rise, the dream home you’re barely able to afford now may become even more unaffordable down the road.
If you have purchased a home before, then you know how much interest rates can affect your buying power. Since the housing market bubble burst in 2008, many homebuyers and owners have been worried about what the market might do in the future and rightfully so. If you’re looking to jump into a fast-growing housing market, get away from the coastline and look further inland. More people are moving out of overpriced cities like New York and Los Angeles to up-and-coming cities like Boise in Idaho and Salt Lake City in Utah. For example, housing prices have outpaced wages in places like San Diego County in California and Miami-Dade County in Florida.
These heavy-hitters are indicating 30-year fixed loan rates will remain in the high 4s to low 5s throughout 2019. This has profound implications for how the lending and real estate business is changing because finding and keeping home purchase customers is a lot different, and more difficult, for lenders. Still the bulk of the market is purchase vs. what the market had become accustomed to with refinance loans coming close to 50% for many years up until the last few. According to the latest REINZ report, Auckland average house prices have dropped by a mere 0.6%.
Experts predict mortgage rates will stay low for the foreseeable future. With the Reserve Banks already beginning to loosen the LVR restrictions, I don’t see 8% being a near-term risk. They have plenty of options to cool a housing market if they need, without raising interest rates significantly.
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