freddie mac

Freddie Mac Releases Good News for Lenders, Buyers & Owners

June 2, 2019

Freddie Mac’s latest mortgage rate forecast is optimistic, predicting no more than a meager increase by the end of 2020. The 30-year, fixed-rate mortgage (FRM) should average 4.3% for the rest of 2019 and by the end of 2020 will be slightly higher at 4.5%. That is a much lower forecast than many industry experts but translates into good news for lenders, buyers, and owners.

Signs of Recovery

Property owners will be happy to hear that home sales are showing signs of recovery. This means more owners will feel confident in making a move as home prices rise. Prices won’t skyrocket but instead will progress upwards alongside the consumer inflation rate.  

As a bonus, the unemployment rate is expected to hold steady at historical lows, which means more buyers will be available.

Fannie Mae

Fannie Mae was also optimistic with their housing forecast for May as well as mortgage rates. They expected the 30-year FRMs to sit at 4.2% and stay there until the end of 2020.

Home sales and median home prices are expected to see modest growth within seasonal variations. Because the forecast predicts slow and modest growth, homeowners might be less enthusiastic if their goal is to sell.

However, when prices rise too rapidly, it keeps first-time buyers from purchasing a home. So, for the most part, everyone should be happy as prices are not too high or too low, making it comfortable for buyers and sellers alike.

Mortgage Bankers Association

The Mortgage Bankers Association (MBA) is also on board with these predictions. Although there are slight variations on what they expect, they are still quite positive. Their expectations are for 30-year FRMs to match Freddie Mac’s 4.3% prediction but with a rise to 4.4% for the balance of 2019. For 2020, they see the first quarter at 4.5% and then a rise to 4.6% for the rest of the year.

They even went so far as to predict what 2021 will look like with an average of 4.6%. Of course, predictions can be misleading. MBA also predicted rates to reach 5.3% for May of 2018 and to reach 5.4% this year. Luckily, they were wrong.

Crunching the Numbers

Mortgage rates are sneaky and can cost a lot less or more than you might expect as they rise and fall. For example, a 1% lower rate saves $200 per month on a $350,000 mortgage. If this doesn’t sound substantial, look at it over the long term. That equals $86,400 over the life of the FRM with common terms.

Low Mortgage Rate Advantage

In hand with the advantage of lower monthly payments, lower rates offer other benefits, including:

  • They make it easier to decide to sell your home knowing rates are reasonable for your new mortgage.
  • They make cash-out refinancing more accessible.
  • They make second mortgages and home equity loans less scary.
  • They make real estate investment more accessible.

Whether you are buying or selling, interest rates and housing prices are providing a unique moment that’s “just right” for a move.

Lakeside Title is Here to Serve You!

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To learn more, give us a call at 410-992-1070.