The American Dream is something people still believe in because it was sold as one of the best financial and life choices an individual or a family could do. However, people were misled into putting their lifetime savings and most people using loans to purchase a house in which they would live and raise a family. We say they were misled because a house does not provide you with income, there are maintenance and repair expenses throughout the life of the home, and you may even be put “under water” if the home ends up being less valuable than you bought it for. For that reason in this article we will be discussing the topic of mortgage rates, indicators, and what is already happening in 2019.
Mortgage Rates and Indicators for 2019
By definition, a mortgage rate or rates are the rate of interest that is charged by the specific lender loaning you the money to purchase the property. From late 2017 through the year of 2018 the delinquency rates fell more than before. We can give the credit to our current president, Donald Trump, for increasing employment and thus providing a better employment rate which raises income and lowers the delinquency even more. This will also result in home prices increases close to 5% in 2019.
Because not every year is the same, what happened the last year will not happen in 2019. This year there are four things we advice people to watch out for if they’re going to purchase a home or giving advice to someone who will. So here they are, key indicators to follow in 2019:
- Contribution of Residential investment to GDP growth
- Real house prices
- Existing home sales
- 30-year fixed mortgage rates
The residential investment contribution to the GDP is a major indicator and connection between the real estate cycle and the business one. It is a combination of new residential construction units, but also includes money spent on new additions to existing dwellings and any remodel money.
Real house prices change and vary widely no matter what period of time you look at. Whether the prices are real or adjusted for inflation the prices will change during the business cycles as well. These house prices will affect the lending market as well and so it is imperative to stay on top of every nuance that occurs.
Another indicator of how mortgage rates can function is the number of existing home sales for any given year. If there are more home sales than previous years and the pattern seems not to be slowing down, then what will or can happen to mortgage rates is that they will slowly begin to drop. Mortgage rates drop because of the amount of loan programs available respective to the amount of buyers looking for a loan. It’s a basic economic principle of supply and demand. Vice versa, when there are thousands of people looking for mortgage loans and only a few providing the loans, the rates will be a lot higher because there’s more demand than product available.
Rates by Company
Below are some of the forecasts for four of the major residential real estate mortgage lenders, Freddie Mac, Fannie Mae, NAR, MBA.
First Quarter 2019, MBA Mortgage Rate Forecast: 4.8%
Second Quarter 2019, MBA Mortgage Rate Forecast: 4.9%
Third Quarter 2019, MBA Mortgage Rate Forecast: 5.0%
Fourth Quarter 2019, MBA Mortgage Rate Forecast: 5.0%
First Quarter 2019, Fannie Mae Mortgage Rate Forecast: 4.8%
Second Quarter 2019, Fannie Mae Mortgage Rate Forecast: 4.8%
Third Quarter 2019, Fannie Mae Rate Forecast: 4.8%
Fourth Quarter 2019, Fannie Mae Rate Forecast: 4.8%
First Quarter 2019, Freddie Mac Mortgage Rate Forecast: 4.9%
Second Quarter 2019, Freddie Mac Mortgage Rate Forecast: 5.0%
Third Quarter 2019, Freddie Mac Mortgage Rate Forecast: 5.2%
Fourth Quarter 2019, Freddie Mac Mortgage Rate Forecast: 5.3%
First Quarter 2019, NAR Mortgage Rate Forecast: 5.0%
Second Quarter 2019, NAR Mortgage Rate Forecast: 5.1%
Third Quarter 2019, NAR Mortgage Rate Forecast: 5.2%
Fourth Quarter 2019, NAR Mortgage Rate Forecast: 5.3%
In conclusion in this article we discussed the topic of mortgage rates as well as the indicators that will show the way in which rates either increase or decrease in any given period of time. As of right now the mortgage rate industry is looking like it did in the earlier 2000s, though not as it was in 2008. Mortgage rates increase in 2017 but began to drop in 2018 now carrying this trend into 2019. To summarize this article as well as some of the numbers shown, we can say that mortgage rates will not be a threat to the real estate industry and it can be a great thing if the inventory improves while home prices begin to flatten out.