As you can see in my 2019 Market Predictions for Residential Real Estate video, one of the things I discuss is the Federal Reserve predicting at least two increases to mortgage rates in 2019. When looking at the recent full-year averages for the 30-year-fixed: 3.65% in 2016, 3.99% in 2017, 4.54% in 2018, the increases have remained steady, and now with inventory also growing on the daily, some say a softening in the market is upon us, or at least on the way. Well, now we’ve been noticing a recent decline in interest rates, so what’s the story? See below details from an article written by Market Watch on January 18, 2019 on why mortgage rates are staying subdued, which is ultimately bringing relief to slumping housing market.
Americans flocked to line up financing for home purchases as rates for home loans remained favorable, suggesting the recent housing downturn may be easing.
The 30-year fixed-rate mortgage averaged 4.45% in the January 17 week, mortgage guarantor Freddie Mac said Thursday. That was unchanged during the week, and still at a nine-month low. The popular product hasn’t managed a gain in over two months.
The 15-year fixed-rate mortgage averaged 3.88%, down one basis point. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.87%, up from 3.83%.
Those rates don’t include fees associated with obtaining mortgage loans.
Even as mortgage rates have declined or stayed steady over the past few months, Americans have applied for home loans in droves. In the most recent week, mortgage purchase applications hit the highest level since April 2010, the Mortgage Bankers Association said Wednesday. (Refinances are also higher; the share of all mortgage applications for refis was at a one-year high.)
Other signs have also pointed to steady, if less frenzied, demand from home shoppers. Home builder Lennar Corp. LEN, -0.98% said earlier in January that December had brought “increased folks willing to buy." And anecdotal evidence from around the country suggests some buyers were holding their breath until after the midterm elections.
Fixed-rate mortgages — which made up 91% of all applications in the most recent week — track the 10-year Treasury yield +0.12% , which has benefited from more dovish signals from the Federal Reserve and the stock market sell-off.
As Sam Khater, Freddie's chief economist, put it, “interest rate-sensitive sectors of the economy, such as consumer mortgage demand and home-builder construction sentiment, are on the mend, which indicates that lower interest rates are beginning to have a positive impact on some segments of the economy.”
The big question now is what kind of spring selling season would-be buyers will face. Will increased rental supply make buyers less frantic to find a home than in past years? Will more current homeowners be willing and able to list their homes for sale?