Forecast On Mortgage Rates For Purchase And Refinance Loans

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This BLOG On Forecast On Mortgage Rates For Purchase And Refinance Loans Was PUBLISHED On June 28th, 2019

Forecast On Mortgage Rates For Purchase And Refinance Loans

Forecast On Mortgage Rates For 2019:

Mortgage rates have been extremely volatile during the past several weeks.

  • Last week’s announcement of the Non-Farm Payroll report for February fueled mortgage rates to an all year high
  • The good news is that mortgage rates recovered quickly
  • This type of volatility draws great concerns for mortgage rates outlook for not just the second half of 2019 day to day
  • Last year, there has been constant talk and rumors that forecast on mortgage rates was that mortgage interest rates will start increasing that the Federal Reserve Board will be raising interest rates
  • Rumors of the dim forecast on mortgage rates last year did not affect home buyers
  • Home prices were going up nationwide due to the demand for housing and the low inventory

In this blog, we will discuss Forecast On Mortgage Rates For Purchase And Refinance Loans.

Forecast On Mortgage Rates Still Low

Forecast On Mortgage Rates Still Low

Mortgage Rates have been dropping since the beginning of the year. Despite the volatility in the stock markets and mortgage markets, mortgage rates still remain low:

  • It is not too late for homeowners to explore the idea of refinancing their current mortgage loans for a better rate or converting their FHA to a conventional loan to reduce or eliminate the pricey FHA annual mortgage insurance premium
  • Mortgage rates for conventional loans for prime borrowers still are just slightly below 4.0% according to data released by Freddie Mac last week
  • The 4% figure is an average of mortgage rates on conventional loans nationally for prime borrowers
  • Prime borrowers are borrowers with credit scores of 740 FICO and those home buyers who are putting down 20% down payment on a home purchase

Or homeowners with at least 80% loan to value.

Federal Reserve Board And Forecast On Mortgage Rates

Federal Reserve Board And Forecast On Mortgage Rates

The Federal Reserve Board is planning in dropping interest rates in the second half of 2019:

  • This holds true even though weak economic news and turmoil internationally
  • The Federal Reserve Board has been talking of raising interest rates year after year
  • But this time around, it seems like they will take action and start lowering interest rates
  • Talks of the Federal Reserve Board of raising interest rates was no surprise to the general public
  • Interest rates cannot remain this low forever

The interest rates increase is expected to be gradual and most folks are ready for this change.

Housing Market And Forecast On Mortgage Rates

Housing Market And Forecast On Mortgage Rates

Despite talks of higher interest rates last year in 2018, the housing market remained stronger than ever:

  • The rumors of rising mortgage rates last year did not seem to deter home buyers
  • The comeback of the 3% down payment conventional mortgage program for first time home buyers by Fannie Mae and Freddie Mac, the home purchase market does not seem to be affected by the higher interest rates that are being projected all of last year

Homeowners needing to refinance their current mortgage loans should consider locking their mortgage rates as soon as possible in the event if mortgage rates start spiraling. Rates are expected to drop further throughout 2019. Again, there is no guarantee that the Fed will start increasing interest rates.

What Experts Forecast On Mortgage Rates

What Experts Forecast On Mortgage Rates

Alex Carlucci, a senior vice president of Gustan Cho Associates, is a loan officer and senior market analyst. Mr. Alex Carlucci issued the following statement earlier this week:

This week, the average U.S. rate for a 30-year fixed mortgage fell to a three-year low, according to the latest Freddie Mac Primary Mortgage Market Survey.

According to the company’s data, the 30-year fixed-rate mortgage averaged 3.73% for the week ending June 27, 2019, down from last week’s rate of 3.84%. That’s significantly lower than 2018 levels when the rate averaged a whopping 4.55%. While the industrial and trade-related economic numbers continue to dominate the news, the drop in mortgage rates over the last two months is already being felt in the housing market,  Freddie Mac Chief Economist Sam Khater said. Through late June, home purchase applications improved by five percentage points compared to the previous month. In the near-term, we expect the housing market to continue to improve from both a sales and price perspective. The 15-year FRM averaged 3.16% this week, dropping from last week’s 3.25%. This time last year, the 15-year FRM came in at 4.04%. Lastly, the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.39%, falling from last week’s rate of 3.48%. Unsurprisingly, this rate is much lower than the same time period in 2018 when it averaged 3.87%.

Government Loans

Government Loans

FHA, VA, and USDA Loans will definitely follow the path of conventional loans when interest rates go up. However, it will have a lower impact than conventional loans.

  • Conventional mortgage rates have rapid volatility whereas government loans move at a slower pace

This is good news that mortgage rates on government loans will not go up 1.0% overnight. It is a possibility though.

Are Mortgage Rates Going Up In 2019?

Are Mortgage Rates Going Up In 2019?

Nobody has a crystal ball:

  • Even though the plan for the Federal Reserve Board is to lower interest rates in the second half of 2019, they can postpone that decision if there is market news or signs of inflation
  • Or other factors that may come into play between now and their planned date
  • Mortgage rates can go up, stay the same, or even go down in 2019

Until the time comes, nobody knows and the market and economy will dictate whether rates will go up and how much it will increase.

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