Homebuyers Will Like This Mortgage Rates Forecast
After soaring to the highest levels in almost eight years last November, mortgage rates have been coming down -- and a new forecast expects them to stay down.
Mortgage giant Freddie Mac now says 2019's average rate on 30-year mortgages will be 4.6%, which is the same as last year. That's a change from Freddie Mac's earlier prediction that rates would rise to an average 4.7%.
But don't hesitate too much if you're thinking of buying a home or refinancing your existing mortgage. The benchmark mortgage rate is expected to rise to 4.9%, on average, in 2020.
The current average on a 30-year fixed-rate mortgage is unchanged this week at 4.35%, Freddie Mac says.
One year ago, the rate was higher than it is today — averaging 4.43%. The loans in Freddie Mac's survey come with an average 0.5 point.
Borrowers are latching onto the lower rates. Mortgage applications jumped 5.3% last week from the previous week, and refinance activity rose 5%, reports the Mortgage Bankers Association.
Why rates are doing what they're doing
Mortgage rates are falling as the Federal Reserve pauses its campaign of interest rate hikes.
Mortgage rates are holding at lower levels as the Federal Reserve sends more signals that it's in no hurry to raise interest rates again.
Fed Chairman Jerome Powell appeared before the Senate Banking Committee this week and repeated the central bank's position that it will be "patient" with future rate hikes.
Home shoppers and sellers will not want tight, says Sam Khater, Freddie Mac’s chief economist.
"The general decline in rates we have seen recently, combined with rebounding pending home sales, hint at a strong spring homebuying season," Khater says.
Freddie Mac is predicting that favorable mortgage rates will push home loan originations up 2.6% this year and contribute to increases in housing starts and home sales.
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This week's other mortgage rates
Rates on 15-year mortgages are averaging 3.77% this week — down slightly from last week's 3.78%, Freddie Mac says.
The rates on those shorter-term home loans also have fallen below the levels from this time last year, when the average was 3.90%.
And 5/1 adjustable-rate mortgages — with rates that are fixed for five years and then can "adjust" up (or down) every year after that — also are unchanged this week, with initial rates averaging 3.84%.
One year ago, those ARMs were offered for an average 3.62%.
