Mortgage Advice

Interest Rates and the Housing Market in 2019

Carpe Diem! Strike while the iron is hot! Make hay while the sun shines! These timeless adages obviously stress a call to action. Good advice if you are a home buyer or considering a refinance in our current real estate market. Now is the time to act.

In the world of financial markets, things often change abruptly. Just a few months ago, real estate market heavyweights such as Fannie Mae and the National Association of Realtors revealed their interest rate forecasts for 2019 – they were projecting that the average 30-year fixed mortgage interest rate for 2019 would be just above 5%. In addition, the anticipated Federal Reserve Bank rate hikes were dovetailed from four potential increases to just two this year.

Given recent dramatic developments in the financial markets, the Federal Reserve Bank has indicated it will not make any of the previously expected interest rate hikes in 2019. This has resulted in a dramatic drop in mortgage rates leading to a renewed surge in purchase and refinance applications. At one point, these rates dipped to a 2-year low at the time of the announcement. Based on current market forecasts, it appears that we will not see another Fed rate hike until 2020 leading to the expectation that 30-year fixed mortgage rates should trend in the low-high 4% range throughout the remainder of 2019.

While lower rates are expected to remain in 2019, it is still critical to take advantage of the current market before rates go up. Remember, in 2018 alone, the U.S. Federal Reserve raised short-term interest rates four times on the heels of several previous years with similar hikes.

Despite geo-political and economic uncertainty from trade tensions and stock market volatility, the U.S. economy continues to grow, although at a slower pace. Housing prices will rise again, but not with the same level of appreciation as previous years. Residential inventory suggests tightness, particularly at the entry-level for first-time homebuyers.

So, what is the best path to homeownership in the 2019 market?

Position yourself for success by getting qualified. If needed, work on improving your credit, keep saving for that down payment and seek professional advice from reputable realtors and experienced mortgage professionals. Eligible buyers may want to consider purchasing sooner rather than later in this environment. Be prepared to move quickly when a desired home becomes available. A local Univest Home Loan representative can assist you with obtaining a pre-approval, an effective tool to differentiate you from other buyers.

Whether you are purchasing or refinancing, it appears that locking an interest rate today versus “playing the market” would be prudent. Contact us today at 877-723-5571 to learn more.

Univest Bank and Trust Co. is an Equal Housing Lender