Intro: Mortgage Rate Trends & Forecast (Interest Rate Trends 2017–2020)
With the economy and the housing market improving across the country since the financial crash of 2008, it is an ideal time to buy and sell a house.
This is especially true because mortgage rate trends remain steady—sometimes even decreasing—making homeownership more affordable.
Since interest rate trends play such a big role in the decision to buy a home, this article will examine the mortgage rate forecast from 2016 to 2020.
Being informed not only about mortgage trends today, but also into the future, will help you make an informed decision about when is the right time to buy or sell your home. Keep reading for everything you need to know about mortgage interest rate trends in the coming years.
Mortgage Rate Trends Today
At present, the 30-year mortgage interest rate in the United States is sitting at 3.43%. This value is current as of September 1, 2016.
In fact, while mortgage interest rates have been remained relatively low throughout 2016, they fluctuated between 3.97% and 3.41% over the first two quarters and have dropped fairly consistently to date, making mortgage rate trends today among the lowest we have seen in a while.
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Moreover, this represents an even bigger annual drop in mortgage rate trends, as interest rate values one year ago were much higher, at 3.93%. In fact, this is a significant drop in mortgage rate trends today over the past year, at -12.72%.
YCharts.com tracks interest rates and mortgage trends in America, providing a 30-Year Mortgage Rate Summary. Looking at long-term mortgage rate trends is useful in understanding mortgage trends today because it helps us get a sense of how interest rates for home loans have changed over time, as well as how they might change in the future.
For example, when YCharts first started keeping track of average interest rate trends as of April 2, 1971, the first recorded value of was 7.33%. Since then, the website reports a long-term average of a whopping 8.28%.
This means that mortgage rate trends increased before dropping to the lower mortgage trends of today. Of course, a lot can change in 30 years.
However, understanding the sizable drop in interest rate trends over the past several decades make it clear that we cannot count on the long-term mortgage rate forecast to continue to look as appealing beyond 2020 as it does today.
Figure 1 from YCharts.com illustrates how mortgage rate trends have changed in the past 30 years.
Figure 1: Interest rates from 2012 to 2016.
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Mortgage Interest Rates Forecast into the Future
Now that we have taken a look at mortgage rate trends today and understand how they have changed over time, we will examine the mortgage rate forecast for the next five years, for the remainder of 2016 until 2020.
Despite the relatively low mortgage trends today that were previously mentioned, there is some uncertainty as to whether they will remain that way.
For example, Mortgage News Daily reported on September 6, 2016 that a recent big jobs report came out a little weaker than was expected, which put “mortgage rates in a bit of a pickle.”
It even had some underlying bond markets speculating that mortgage rate trends would soon be higher, in the “first step in the move up and out of the recent sideways range.”
As it turns out, the movement was hardly noticeable when looking at the big economic picture, and interest rate trends have not yet seen any significant increase. For now, mortgage interest rates are generally low, as seen in the best execution rates outlined in Figure 2, according to data from Mortgage News Daily.
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Best Execution Mortgage Rates
Current Best Execution Mortgage Rates | |
| 30-year fixed-rate | 3.375 to 3.5% |
| FHA/VA | 3.0 to 3.25% |
| 15-year fixed-rate | 2.75% |
| 5-year ARMS | 2.75 to 3.25% |
Figure 2: Mortgage best execution mortgage rates today
So why have interest rates & mortgage trends remained so low? Global growth concerns are the catalyst behind the long-term low rates that we have been seeing. Nevertheless, Mortgage News Daily cautions that “periodic corrections toward higher rates can and will happen.
These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks.”
Looking ahead to the mortgage rate forecast for 2016 to 2018, the Economy Forecast Agency predicts that the 15-year mortgage rate will have increased by the middle of 2018, albeit quite minimally.
At the end of September 2016, for example, the mortgage rate forecast is estimated to be 3.38%, while the same rate at the end of August is predicted to be 3.56%.
The mortgage interest rates forecast indicates that November 2017 will see the highest interest rates for home loans, at a maximum of 3.72%, a minimum of 3.50%, and a closing rate of 3.61%.
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