Mortgage rates should stay low for the rest of this year and well beyond
2019 is expected to be the best year for refinancing since 2016 and the best year for purchase mortgages since 2006
December still the best month to buy a home (June is the worst)
7-Dec-19 Homeowners should forget about shopping for holiday bargains and start mortgage hunting now to lock in the best 2019 loan deals.
Housing experts say now may be the best time in months to buy a home at a good price and finance it with a loan carrying a low interest rate of around 3.8 percent.
According to a new forecast by Freddie Mac, mortgage rates should stay low for the rest of this year and well beyond.
In Freddie Macs newest housing market forecast, the companys economic and housing research group states that they expect benchmark 30-year fixed mortgage rates to remain around 3.8 percent for the rest of 2019 and stay at that level for all of 2020 and 2021.
The economy has seen increased volatility in November as hopes for a favorable resolution to the trade dispute have recently waned, said Sam Khater (left), Freddie Macs chief economist. However, given low interest rates, modest inflation, and a solid labor market, the U.S. housing market continues to stand firm, and our forecast is for the housing market to maintain momentum over the next two years.
On December 5, Freddie Macs Primary Mortgage Market Survey reported that benchmark 30-year fixed home loans averaged 3.68 percent nationwide. A year ago, the 30-year fixed loan average was 4.75 percent.
Experts say this years unexpectedly low rates have sparked a tsunami in refinancing, as well as a surge in home purchases. A recent forecast from the Mortgage Bankers Association shows that 2019 is expected to be the best year for refinancing since 2016, and the best year for purchase mortgages since 2006.
The Freddie Mac report predicts the good times to keep rolling. In its latest forecast, the government-sponsored enterprise sees a booming $846 billion in refinance originations in 2019, and $834 billion more in refinancing activity in 2020.
Both of those projections would be more than $300 billion in refinancing activity than was accomplished in 2018.
Outlook good for home sales in 2020 and 2021 but price growth will slow
Freddie Mac predicts there will be $1.255 trillion in purchase originations for home loans this year. And those figures are expected to rise in both 2020 and 2021. According to Freddie Mac, there will be $1.299 trillion in purchase originations in 2020 and $1.369 trillion in purchase originations in 2021.
Overall home sales are also forecast to rise in each of the next two years. Freddie Mac is predicting 6 million home sales in 2019, a solid 6.1 million units sold in 2020, and sees a hefty 6.2 million going under contract in 2021.
Despite home sales and purchase originations projected to rise over the next few years, Freddie Mac currently sees a decline in total mortgage volume in 2021, compared with 2020s expected level, due to a decline in refinancing.
The forecast surprisingly sees only $429 billion in refinancing in 2021. The reason? By then, there simply will not be that many homeowners left who have not refinanced their mortgages, especially if home-loan interest rates stay as low as expected.
Overall, Freddie Mac is forecasting $2.101 trillion in total mortgage originations in 2019 and $2.132 trillion in originations in 2020. However, only $1.798 trillion is expected in 2021.
Unfortunately for home sellers, Freddie Mac also expects home price growth to slow over the next few years, with annual growth rates of 3.2 percent in 2019, some 2.9 percent in 2020, and only 2.1 percent in 2021.
Day after Christmas still the best day to buy a home
According to an ATTOM Data Solutions analysis, buyers willing to close on a home purchase the day after Christmas realize the biggest discounts below full market value of any day in the year.
This analysis of more than 23 million single-family home and condominium sales over the past six years is evidence of the continuation of a hot sellers market in many sections of the U.S.
Closing on a home purchase the day after Christmas or on New Years Eve can be one of the most financially beneficial holiday season gifts you can get, said Todd Teta (left), chief product officer with ATTOM Data Solutions.
While lots of folks are shopping the day-after-Christmas sales or getting ready to ring in the New Year, our data shows that buyers and investors are buying homes on those days at a discount. Thats a far cry from buying during June, when they are likely paying about a seven percent price premium, Teta said.
The analysis also looked at best months to buy at the national level. Nationally, while December is considered the best month to buy overall, there is still about a 1.2 percent premium. However, you can expect to pay higher premiums if you plan on purchasing in the summer, with the month of June having the highest premium at 7.1 percent.