Last week's economic news included several reports related to housing. The Case-Shiller 20-City Home Price Index for June rose to 4.50 percent as compared to Mayâs reading of 4.40 percent. Denver, Colorado was the only city to post double-digit year-over-year growth. FHFA also released its House Price Index for June. Home prices for properties associated with mortgages owned or backed by Fannie Mae and Freddie Mac rose at a year-over-year rate of 5.60 percent in June as compared to Mayâs reading of 5.70 percent.
Summary: Mortgage rates in Seattle – and across the nation – continue on a downward trend into August 2019 and are expected to continue to dip into 2020. With prices in Seattle also on the decline, now may be a great time for home buyers to get into the market.
Back in November 2018, mortgage rates started a downward descent that is still ongoing. Seattle mortgage rates are now at 3.73%, which is near its lowest point for the year and are expected to continue dipping over the near future.
So it appears that Seattle home buyers may have a perfect opportunity to get into the housing market, thanks to both lower interest rates and lower home prices compared to the same time last year.
Seattle Mortgage Trends in 2020
As of late August 2019, Freddie Mac anticipates the annual average interest rate for 2019 to be 3.9%, then dip to 3.7% in 2020. The recent decrease in mortgage rates over the last few months stems in part from the weaker global economy and continued global trade disputes. Yet in spite of global economic unrest, the US economy remains strong and continues to get stronger.
Further, the Federal Reserve’s latest meeting resulted in the entity cutting rates for the first time since the recession over a decade ago in an effort to ward off an economic downturn. Interest rates impact the cost of borrowing for mortgages and are currently hovering between 2% to 2.25%.
While Fed policy doesn’t influence Seattle mortgage rates directly, it can have an indirect affect.
According to the latest survey, the average rate for a 30-year fixed home loan dipped to 3.73% in Washington State during the week of ending August 29, 2019.
Bear in mind this is an average of rates assigned by lenders across the industry. Individual rates vary widely based on the type of loan being used, the borrower’s credit score, and other factors.
The chart below, courtesy of Freddie Mac, shows the end-of-year surge clearly.
As you can see, mortgage rates have been up and down over the past seven years, and are near their 12-month low as of the middle of 2019. Most notable is the fact that mortgage rates have been decreasing since the start of 2019 and have shown no signs of increasing.
According to Freddie Mac’s economists:
“We expect a significant increase in refinance originations in upcoming quarters. Going forward, the combination of low mortgage rates, a tight labor market, and strong consumer confidence will offset declining business sentiment. These factors will set the stage for continued improvement in the housing market heading into the fall.”
The average rate for a 15-year fixed home loan also decreased this week, as did the 5-year Treasury-indexed adjustable mortgage.
- 30 Year: 4.52%
- 15 year: 4.11%
- 5-1 ARM: 4.24%
- 30 Year: 3.73%
- 15 year: 3.04%
- 5-1 ARM: 4.21%
Seattle home prices also continue to decline. The median home value in the city dropped down to $714,000 as of July 2019, and it’s expected to continue decreasing throughout 2020
The message to home buyers is clear: Now may present an ideal time to get into the market as home prices and mortgage rates are declining.