Freddie Mac: Mortgage Rates Will Mostly Stay Flat for 2019

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Freddie Mac is forecasting that mortgage rates will remain more or less flat for the remainder of 2019, possibly providing a much needed boost to what has arguably been an anemic spring home buying season.

“While mortgage rates have risen in recent weeks, they remain lower than where they were a year ago and wage growth has accelerated and is finally growing at the same rate as home prices for the first time in seven years,” says Sam Kahter, chief economist for Freddie Mac, in the company’s most recent housing and economic forecast. “We expect to see the result of these low mortgage rates and stronger wage growth translate into better home sales in the coming months, along with better than expected refinance activity for the year.”

Khater says should mortgage rates remain favorable for the remainder of the year, it should help homebuyer affordability.

“Without a doubt, these low mortgage rates and higher incomes will help homebuyers on the affordability front this spring home buying season,” he says. “Unfortunately, first-time home buyers will likely not realize as much of the benefit with such high demand and price growth for lower-priced homes.”

In its forecast, Freddie Mac predicts that the average rate for 30-year for 2019 will be around 4.3% – which is below last year’s average of 4.6%.

Low mortgage rates and a strong job market should push total home sales to around 5.98 million for the year – which is above the level seen in 2018.

The major wildcard – once again – is inventory.

“Unfortunately, the first quarter forecast on housing starts was lowered due to January and February data, which effectively lowers the 2019 annual forecast to 1.26 million units,” he says.

Home prices are expected to increase 3.5% in 2019, according to the firm’s forecast.

Single-family mortgage originations are expected to increase for the remainder of the year, due in past to lower mortgage rates, which should help spur increased refinance activity.

Freddie Mac predicts that refinance share for 2019 will be around 33%, up from 30% last year.

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