BY: Erik J. Martin/themortgagereports.com
No one can perfectly prophesize where rates will be next year. But industry experts have a better feel for where they could be headed. So we asked 10 trusted real estate pros for mortgage rates forecast.
We got them to predict where 30- and 15-year fixed-rate mortgage rates will be by mid- and late 2019. Their hunches may help you make a more informed decision on home financing in the coming weeks or months.
Expert: Rick Sharga, executive vice president, Carrington Mortgage Holdings
Mid-2019 rate predictions (30-year/15-year mortgage): 5.25 percent/4.65 percent
Reasons why: “We’ve been in an artificially and historically low interest rates environment. That’s been true since the onset of the Great Recession. Interest rates are finally beginning to revert to more normal levels. Rates have risen almost a full point over the past year. The trend clearly points to rates continuing to inch up.”
Late 2019 rate predictions (30-year/15-year mortgage): 5.5 percent/4.95 percent
Reasons why: “Typically, 30-year fixed-rate loan rates track very closely with yields on 10-year U.S. Treasury bonds. That’s because those bonds and mortgage-backed securities target the same types of investors. Those yields are forecast to go up next year and end 2019 somewhere between 3.5 and 4 percent. If that’s the case, mortgage rates will go even higher.”
Robert R. Johnson
Expert: Robert R. Johnson, finance professor, Heider College of Business, Creighton University
Mid-2019 rate (30-year/15-year mortgage): 5.56 percent/4.91 percent
Reasons why: “The Federal Reserve Board will likely continue to raise rates in order to achieve its dual mandate of stable prices and maximum employment. There’s a greater than 70 percent chance the Fed will raise the Federal Funds Rate by at least 50 basis points. That’s per the CME Group’s FedWatch Tool.”
Late 2019 rate (30-year/15-year mortgage): 5.80percent/4.30percent
Reasons why: “The Fed will raise the target Federal Funds Rate by an additional 25 basis points between June and December 2019. That will lead mortgage rates to rise further.”
Expert: Ralph DiBugnara, senior vice president, Residential Home Funding
Mid-2019 rate (30-year/15-year mortgage): 5.0 percent/4.375 percent
Reasons why: “Consumer spending is way up. This could further influence an increase in rates. When spending is more free, there is much more confidence to continue to raise rates. The question is, will the Fed continue to raise the borrowing rate? And will unemployment continue to decline?”
Late 2019 rate (30-year/15-year mortgage): 5.5percent/4.5percent
Reasons why: “This is based on what the Federal Reserve has stated in regards to their policy. It’s also based on how the economy is trending currently.”
Expert: Bruce Ailion, Realtor and real estate attorney
Mid-2019 rate (30-year/15-year mortgage): 5.4 percent/5.15 percent
Reasons why: “I expect the Federal Funds Rate to increase in the first half of 2019. That’s if the economy continues on the present path. This would result in rates rising.”
Late 2019 rate (30-year/15-year mortgage): 5.75percent/5.5percent
Reasons why: “If the economy stays on track, along with increased inflation, a second Federal Funds Rate increase is expected. Continued economic growth will result in increased rates in the second half of 2019.”
Expert: Ben Mizes, CEO/founder, Clever Real Estate
Mid-2019 rate (30-year/15-year mortgage): 5.55 percent/4.9 percent
Reasons why: “Over the next year, I think we’ll continue to see the Fed increase rates. But the housing market and overall economy will play a role. If we continue to see the housing market slow and home prices slip, the Fed will feel pressure to not raise rates. Or they will institute only a small raise.”
Late 2019 rate (30-year/15-year mortgage): 5.7percent/5.2percent
Reasons why: “As rates rise, the purchasing power of buyers will drop. This will lead to a declining housing market and murmurs of a recession. To stop this from happening, the Fed will feel pressure to not raise rates or only institute a small increase.”
Expert: Tamara Dorris, adjunct real estate professor at American River College
Mid-2019 rate (30-year/15-year mortgage): 4.5 percent/4.25 percent
Reasons why: “Real estate financing follows certain trends and cycles, which leads me to believe rates may go up, but not by much. This hunch is based on almost over 26 years in the business, 16 years as a real estate professor, and watching the cycles.”
Late 2019 rate (30-year/15-year mortgage): 4.85percent/4.50percent
Reasons why: “So much of the prediction is dependent on the economy and Treasury bills, not to mention other unknown factors. But cyclically speaking, I suspect the year will end with a higher rate than mid-year and then stabilize for a longer period of time.”
Michael P. Goldrick
Expert: Michael P. Goldrick, chief lending officer for PCSB Bank
Mid-2019 rate (30-year/15-year mortgage): 5.125 percent/4.625 percent
Reasons why: “My position is based upon expected short-term interest rate hikes from the Fed, which usually push longer term rates. Key factors supporting the interest rate increase are the relatively favorable economy, low unemployment, and the Fed’s desire to manage inflation.”
Late 2019 rate (30-year/15-year mortgage): 5.375 percent/4.875 percent
Reasons why: “I believe rates will continue to rise by 25 to 50 basis points. This is based on a continued favorable economy, low unemployment, and potential inflation.”
Expert: Colin Robertson, founder/owner, The Truth About Mortgage
Mid-2019 rate (30-year/15-year mortgage): 5.0 percent/4.375 percent
Reasons why: “Rates have been moving higher with no letup in sight. You can blame a stronger economy, solid jobs report and inflation for that. If the economy keeps chugging along as it has been, rates may move even higher.”
Late 2019 rate (30-year/15-year mortgage): 5.125percent/4.5percent
Reasons why: “I don’t see a ton of rate movement next year. But we could still experience swings in either direction as news happens. Trade policies and politics could actually push rates lower if it shakes things up enough to scare investors back into bonds from stocks. I feel most of the upward movement in rates has already taken place. That represents a silver lining. And that means smoother sailing in 2019 and beyond.”
Expert: James McGrath, co-founder, Yoreevo
Mid-2019 rate (30-year/15-year mortgage): 5.0 percent/4.4 percent
Reasons why: “I predict both the 30- and 15-year mortgage will be at today’s levels in both June and December of 2019. The 10-year U.S. Treasury bond has already pulled back about 10 basis points from its highs. So there should be some pullback in the immediate term. But that should be pretty quick, and rates could pop up at any moment.”
Late 2019 rate (30-year/15-year mortgage): 5.0percent/4.4percent
Reasons why: “Again, mortgage rates should stay flat. The main thing that will affect them is expectations. If investors think rates are going to go higher faster, rates will go up. But if they decide the Fed will be more gradual with rate increases, mortgage rates will decrease.”
Expert: Jeremy Sopko, CEO, Nations Lending Corporation
Mid-2019 rate (30-year/15-year mortgage): 5.25 percent/4.75 percent
Reasons why: “I don’t see the economy sustaining the mid-year gains from last year. And this won’t require the Fed to take significant action to cool inflation.”
Late 2019 rate (30-year/15-year mortgage): 5.25 percent/4.75 percent
Reasons why: “Rates will flatten out over 2019. We’re in a hot economy now and will probably remain so for the rest of 2018. But it’s hard for me to believe this growth is sustainable.”
Act now or wait?
Many believe it’s smart to buy soon, if you can afford it.
“Now is as good a time as any to act and lock in a rate,” says DiBugnara. “It’s still cheaper to borrow money now than in almost any other historical period outside of the last 10 years. Prices of homes are stabilizing. I’d advise getting into the buying game as a priority if you’re thinking of it.”
“In this rate environment, it’s very clear,” says Johnson. “The likelihood of further mortgage rate increases is much higher than the chance that rates fall in the near future. Prospective borrowers should lock in a rate as soon as they can or risk suffering regret.”
It’s also wise to consider a refi soon—that is, if you can get a rate lower than your current one.
“I would encourage anyone refinancing from an adjustable rate mortgage or a home equity loan with a stale floating rate to do so sooner rather than later,” suggests Goldrick.
Do your due diligence
Others say it’s better to wait for the right moment to lock in a rate.
“Rates tend to ebb and flow. So there are usually always opportunities ahead. Locking way in advance doesn’t always give you the chance to get something better,” Robertson notes.
Don’t rush into a decision before weighing your options, either.
“Borrowers need to make educated decisions based on their current financial needs,” says Sopko.