Are mortgage rates going to 5%?
I read this comment recently: “Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have hovered around 4%. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by this time next year.”
The Mortgage Bankers Association (MBA) is the United States national association representing some 2,200 companies involved in mortgage finance. MBA produces monthly forecasts of, among other things, the 30 year Fixed Rate Mortgage (FRM) rate. With their knowledge base, it might be reasonable to expect their forecasts to be quite accurate, so let’s look at their forecasts in recent years. In particular, I want to look at their forecasts for the year after the one in which the forecast was made.
Throughout 2014 MBA expected the 2015 FRM to be over 5%. It was 4.0%.
Throughout 2015 the MBA expected the 2016 FRM to be well over 5% (are you seeing a pattern here?) It was 3.8%.
At the start of 2016 the MBA expected the 2017 FRM to be over 5%, but by July had lowered the forecast to 4.4%.
At the start of 2017 the MBA forecast the 2018 FRM to be – yes, over 5%. By July the forecast had dropped to 4.9%, a level maintained in its September forecast just published.
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Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated