The housing market received good news on Thursday, as Freddie Mac reported mortgage rates dipped to 4.14% and project them to be a quarter to half a percent lower than they were last year.
Freddie Mac states that the drop was caused by slightly weaker inflation and labor economic data, and the GSE anticipates these factors, along with growing consumer confidence, will boost home sales in the coming months.
“We expect the 30-year fixed-rate mortgage to average 4.3% and 4.5% in 2019 and 2020, respectively,” Freddie Mac stated in a release. “And we expect the 5/1 adjustable to stay at 3.8% for the remainder of this year, which is the same level as last year.”
According to the report, 30-year fixed-rate mortgages dropped 0.41% year-over-year, and fell 0.06% from last week’s 4.20%. This was the first reported decrease in nearly a month.
Rates for 15-year fixed-rate mortgages saw a similar decline, coming in at 3.6%, which is a 0.43% decline from 2018. The week-to-week rate fell just 0.04% from 3.64%.
For historical context, 30-year fixed-rate mortgage rates were at 4.84% as of May 7, 2009.
"The 2019 housing market is different than what we predicted in fall 2018, primarily due to an unexpected drop in mortgage rates in January 2019," said Danielle Hale, realtor.com's Chief Economist, following its most recent housing forecast. "We believe 2019 will be characterized by lower, but still increasing mortgage rates that will buoy home prices and sales by boosting buyers' purchasing power beyond what we initially projected. This will create a slightly hotter, but still cooling housing market relative to the initial forecast five months ago."
Long-term mortgage rates have been brought down to around 4%, partly due to the Fed’s decision to hold off on further rate hikes for now. Before the Fed’s decision, realtor.com’s data suggested an increase in upward momentum spurred by continued economic growth and monetary policy tightening.
Federal Reserve announced Wednesday that it will be keeping the federal funds rate at 2.25% to 2.50%, citing a strong labor market, increased household spending, and a lower unemployment rate.