A welcoming housing market could be in the forecast for a while after Freddie Mac’s July report indicated that low mortgage rates will likely hang around for a while.
With 30-year fixed mortgage rates hanging around or below 4% for much of 2019, the economy has seen an uptick in mortgage applications for purchase and refinancing.
That trend is expected to continue into next year after the Federal Reserve announced a rate cut, one that some analysts say has already been informally absorbed by the market. An actual move by the Fed would signal further changes in the current direction.
The 30-year fixed mortgage rate has remained below 4% since the end of May, held there by what Freddie Mac called concerns over trade disputes, a possible economic slowdown and anticipated action by the Federal Reserve.
Freddie Mac now projects an annual 30-year fixed rate mortgage of 4.1% over the full course of 2019. For 2020, they have it forecast even lower at 4%, according to MortgageNewsDaily.
A recent upward trend in pending home sales has been attributed to a strong stock market, increasing home values and job growth. Limitations in home sales this year — projected at about 6 million — are linked to lower home inventory, but Freddie Mac foresees that number returning to 2017 levels, about 6.12 million, in 2020.
Pending home sales rose 2.8% in June compared to May and were 1.6% higher compared to June 2018. That marked the first annual gain in that metric in 17 months, according to the National Association of Realtors.
These projections will likely give the housing market additional breathing room as buyers and homeowners looking to refinance gain confidence in current conditions holding steady for the next 16 months.
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