What are some predictions for mortgage interest rates in 2019?

30 year fixed mortgage interest rates rose in 2018 from an average of 3.99% on January 11th of 2018 to 4.81% on November 29th of 2018 (source: FHLMC), and the United States Federal Reserve raised their overnight target bank lending rate four times during 2018 for a total move from 1.5% to 2.5%.  So what is the forecast for 2019?

Here are three predictions for 30 year fixed mortgage rates in 2019 from three major players in the mortgage industry[1]:

  1. Freddie Mac  5.1%  

As of November 27, 2018, the Federal Home Loan Mortgage Corporation (Freddie Mac) is calling for modest housing market growth in 2019 and 30 year fixed interest rates at or above 5.1%.  In their forecast, analysts at Freddie Mac point to possible inflation due to a strong labor market and the end of the government mortgage-backed securities purchase plan as key factors leading to higher rates.  Freddie Mac Predictions (November 27, 2018)

  1. Fannie Mae  4.8%

On December 14th of 2018, the Federal National Mortgage Association (FNMA) Housing Forecast called for no change in interest rates in 2019, with 30 year fixed interest rates holding steady at 4.8%.  FNMA Interest Rate Forecast  (December 14, 2018)

  1. Mortgage Bankers Association  5.1%

On October 17, 2018, the United States Mortgage Bankers Association (MBA) published a report forecasting that the Federal Reserve will raise overnight bank rates three times in 2019 and predicting an increase in 30 year fixed mortgage interest rates to 5.1%.  While the MBA predicts that home purchase numbers will continue to increase, they predict lower overall mortgage originations as the number of refinances continues to decline.  MBA Predictions (October 17, 2018)

How well did the 30 year fixed rate forecasts from these three agencies hold up last year?

Here are the results as of November 2018:

Agency                        2018 Prediction            Average 30 yr rate (as of Nov 29, 2018)            Grade*

Freddie Mac                     4.5%                                                    4.81%                                                                 A (93.75%)

Fannie Mae                      4.1%                                                     4.81%                                                                  B (85.4%)

MBA                                    4.6%                                                     4.81%                                                                  A (95.8%)

*grading scale based on percentage of accuracy, dividing each ten percent range evenly by three)

[1] The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation are large purchasers of residential mortgages.  More information can be found at www.efanniemae.com and www.freddiemac.com

 

Kent Cochrum, Senior Loan Originator

NMLS #194755

(630) 330-1334   mobile

(630) 634-5136 office

CIBM Mortgage, a division of CIBM Bank, member FDIC

330 S. Naperville Road, Wheaton, IL 60187

 

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