We’ve been tracking the trends of mortgage rates in Washington State and across the nation, and lately there hasn’t been a whole lot of movement to report.
According to the latest nationwide survey conducted by Freddie Mac, the average rate for a 30-year fixed mortgage loan has barely moved over the last four or five weeks. It’s still hovering in the 4.5% range (give or take a few basis points).
Update on Mortgage Rate Trends for Summer 2018
Only July 26, Freddie Mac’s economic research team published the latest results of their long-running mortgage rate survey. The average rate for a 30-year fixed home loan (the most popular mortgage product among borrowers) inched up slightly to land at 4.54% for that week.
The average rate for a 15-year fixed mortgage was 4.02% for the week, while the 5-year ARM loan averaged 3.87%.
Note: These industry-wide averages can be useful in tracking rates over time. But there are many different variables that can affect the rate assigned to an individual home loan. Credit scores, down payments, and the type of loan being used all play a role. We can provide you with a rate quote based on your particular situation.
Forecasts Suggest a Continue Rise
The latest forecasts from the Mortgage Bankers Association (MBA) suggest that interest rates for mortgage loans will continue to rise gradually through the end of 2018 and into 2019.
In its July 2018 forecast, the industry group predicted that the average rate for a 30-year fixed mortgage would reach 4.9% by the fourth quarter of this year.
The economists with Freddie Mac published a similar forecast in July. They expect 30-year loan rates to end up averaging 4.6% for 2018, and 5.1% next year. We will continue to monitor mortgage rate trends for Washington State and publish updates here on our blog.
Federal Reserve Raises Key Interest Rate
The Federal Reserve’s monetary policy plays a part here as well. While the Fed doesn’t control mortgage rates directly, their policies can influence secondary markets leading to a change in consumer interest rates.
In June, the Fed’s Open Market Committee (FOMC) announced that it would continue to incrementally increase the short-term federal funds rate that banks use when loaning money to each other. This could be yet another driving factor in Washington mortgage rate trends over the coming months.
To quote the minutes from the June 13 FOMC meeting:
“The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation … In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1-3/4 to 2 percent.”
Typically, mortgage rates move upward when the Fed makes these kinds of changes (as an indirect result). But that hasn’t happened thus far. In fact, the average rate for a 30-year fixed mortgage loan declined a bit after that June 13th announcement and is now hovering in the 4.5% range.
Home Prices Keep Rising Across Washington
While mortgage rates in Washington and nationwide have leveled off in recent weeks, home prices continue to climb. According to the latest figures from the real estate information company Zillow, the statewide median home price rose to $375,300 in July 2018. That was a gain of nearly 11% from the same time last year.
And while economists are predicting a bit of a cooling trend for home prices, they will likely continue moving north in most housing markets across the state.