Mortgage rates in Washington and nationwide dropped during the first week of December, giving borrowers an early holiday gift. But how long will it last?
In a previous article, we explained how home buyers across Washington State could save money by purchasing a property over the holidays. Here’s another inventive for buyers. Mortgage rates just sank to their lowest level since early October. The question is, how long will this week’s low rates last?
Mortgage Rates Drop During First Week of December
On December 6, Freddie Mac published the latest results from its long-running mortgage industry survey. This survey gets updated weekly, and it offers insight into average mortgage rates across Washington State (our primary service area) and the nation as a whole.
During the first week of December 2018, the average rate for a 30-year fixed home loan dropped to 4.74%. In November, the survey average nearly reached 5%. So it has come down a bit since then, giving mortgage shoppers a good incentive to lock in their rates.
According to the company’s latest report:
“Mortgage rates declined this week amid a steep sell-off in U.S. stocks. This week’s rate reaction to the volatile stock market is a welcome relief to prospective homebuyers who have recently experienced rising rates and rising home prices.”
Forecasting Into 2019
For a while there, it looked like we would start 2019 with 30-year mortgage rates climbing above 5% (on average). But they’ve since backed down. Not it appears likely that the average rate for a 30-year fixed home could remain below 5% into the first part of 2019. Beyond that is anyone’s guess.
And there are plenty of “guesses” floating around. The latest forecast from the Mortgage Bankers Association (MBA), for example, predicts that 30-year mortgage loans will have an average rate of around 5.1% throughout 2019. Granted, that’s a forecast and not a certainty. But it shows us what industry analysts and economists are thinking about future rate movements.
Aaron Terrazas, an economist within the real estate industry, recently said: “Strong job and wage growth data on Friday [December 7] could easily erase the downward movement in rates seen over the past week.” So maybe now is the best time to lock in that rate.
Washington Gets Higher Loan Limits in 2019
In case you missed it, conforming loan limits are going up in 2019 for all counties across Washington. For most counties, the new loan limit will be $484,350 for a single-family home. Higher-cost real estate markets in the Seattle area will have a limit of $726,525 next year.
These changes apply to both conventional and VA loans. FHA will likely announce its new limits for 2019 within the next week or so. Here are the new limits for all Washington counties.
The Ongoing Rise of Home Prices
So we have two bits of good news for home buyers in Washington State. Mortgage rates have dropped, and loan limits have gone up. But there’s still an ongoing trend that could create some urgency among those considering a purchase — and that’s home prices.
According to the latest data, the median home price for Washington State was around $377,000 as of early December 2018. That was an increase of about 8% from the same month a year earlier. And prices are expected to continue climbing throughout 2019, as a result of strong housing demand and limited supply.
Disclaimer: This article includes mortgage rate forecasts and other housing-related predictions. Those outlooks were provided by third parties not associated with our company. We have presented them here to give you a broad look at current (and expected) mortgage trends.