Last year, many experts in the housing sector predicted that 2019 would see higher home mortgage rates. However, the industry saw rates drop significantly, especially in the second half of 2019. So, as we begin 2020, it’s time to consider how mortgage rates will fare this year.
Will mortgage rates rise, as predicted last year? Or will homebuyers and homeowners witness a similar drop in rates this year?
What to Expect in 2020
According to themortgagereports.com, mortgage interest rates will continue to stay low. The information was compiled by contacting several of the leading lenders, including Wells Fargo, Fannie Mae, NAR, and Freddie Mac. However, despite this prediction, there is no guarantee that rates will continue to stay low.
Mortgage Rate Forecasts
Some homebuyers and refinancers might want to focus only on one forecast, usually the one that is most favorable. However, trusting just one estimate can lead to making a poor decision. Instead, it’s important to analyze as many of the available forecasts as possible to develop a general outlook for 2020 mortgage interest rates.
The Mortgage Bankers Association predicts a 30-year rate of 3.9%, which is the highest prediction from the Big Six. Conversely, Wells Fargo predicts the lowest mortgage rates for refinancers and homebuyers at 3.55%. The average forecast across all agencies averages out as 3.7%, which is more than a whole percentage point lower than rates in 2018.
Here is an overview of the mortgage rate predictions by select home mortgage agencies.
- MBA 3.9%
- NAHB 3.9%
- Freddie Mac 3.7%
- Fannie Mae 3.6%
- NAR 3.6%
- Wells Fargo 3.55%
While there are differences in these predictions, the differences are minor, and the mortgage rates are well below the rates experienced a little over a year ago.
The 3.7% average is in line with the belief of Odeta Kushi, who, speaking with Forbes, announced that there was a broad agreement that mortgage rates would continue this year’s trend and float somewhere between 3.7% and 3.9%.
What Do the Experts Say?
Aside from the predictions listed above, experts have additional thoughts on 2020 mortgage rates.
Lawrence Yun, Chief Economist of NAR, agrees with his firm’s 3.6% prediction. However, he warns that these mortgage rates could be affected by a growing U.S. deficit and cuts to the Federal Fund rate, which he predicts will occur twice by the end of 2020.
Freddie Mac also waded in on the reason for historically low mortgage rates, with the opinion that such a decline relates to a weak global economy and trade disputes. Despite this, however, the U.S. economy still demonstrates growth, which can benefit people looking to buy a home or refinance in the short term, and they believe that these low mortgage rates could continue for some time beyond 2020.
What Do These Mortgage Rate Predictions Mean for You?
With a lack of economic surprises, homebuyers and owners hoping to refinance are poised to take advantage of these rates. NerdWallet posits out that anyone who locks in a mortgage at these rates is doing well, especially considering that mortgage rates between 1978 and 1986 sat in the double digits.
Locking a mortgage rate sooner rather than later protects borrowers from rising rates, should the market experience a sudden shift as the year progresses. With the current economic climate across the world, however, it’s likely the economy will slow further by the end of 2020.
The low mortgage rates indicate there will also be an increased demand for properties, especially in suburban areas, with both Millennials, Gen Xers, and Baby Boomers all looking to take advantage of these rates and snapping up property. Instead of affecting these areas negatively, though, it can show improvements in the area, breathing new life into previously neglected communities.
However, the growing demand has led to a rise in housing prices. So, while mortgage rates remain historically low, home prices continue to rise. Freddie Mac does not believe these prices will affect purchases, though, and predicts that more homes will be sold year-over-year.
What to Do Next?
Buying a home or refinancing early in 2020 is a good choice for many people, as far as interest rates are considered from a historical perspective.
Waiting till later in the year to get a mortgage could also be a good choice, but there is no guarantee that mortgage rates will not rise.
Marimark Mortgage is based in Tampa, Florida and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA, and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.