Mortgage rates are set to remain low all year
Freddie Mac’s April forecast foresaw a promising mortgage market in 2019 that is expected to bring positive mortgage rates and improve homebuyer affordability.
This year’s healthy home sales data, low mortgage rates, and robust job market would boost total home sales to 5.98 million units and top 2018 levels, according to the forecast. Freddie Mac predicted that most of the growth would come from existing home sales.
“Without a doubt, these low mortgage rates and higher incomes will help homebuyers on the affordability front this spring home-buying season,” Freddie Mac Chief Economist Sam Khater said. “Unfortunately, first-time homebuyers will likely not realize as much of the benefit with such high demand and price growth for lower-priced homes.”
However, data from January and February lowered the first quarter forecast on housing starts, pushing down the 2019 annual forecast to 1.26 million units.
Freddie Mac also projected that the 30-year fixed-rate mortgage rate would drop, averaging 4.3% for 2019 from 4.6% in 2018.
Additionally, the house price appreciation forecast stayed the same and was expected to increase 3.5% for this year.
Lastly, the GSE expected the single-family mortgage origination to rise for the rest of the year due to low mortgage rates, which have ended up in more refinance activity. The refi share would climb to 33% from 30% of all originations in 2018, according to Freddie Mac.
“While mortgage rates have risen in recent weeks, they remain lower than where they were a year ago, and wage growth has accelerated and is finally growing at the same rate as home prices for the first time in seven years,” said Khater. “We expect to see the result of these low mortgage rates and stronger wage growth translate into better home sales in the coming months, along with better than expected refinance activity for the year.”
