A new prediction from a key industry group suggests that home buyers in Washington State could encounter higher borrowing costs in 2018. According to the latest finance forecast published by the Mortgage Bankers Association, 30-year loan rates could rise to around 4.5% by the fourth quarter of this year. They expect them to rise gradually throughout 2018 as well.
(For reference, the average rate for a 30-year mortgage loan was around 3.96% when this article was published in July of 2017.)
Forecast: Will Washington State Mortgage Rates Rise into 2018?
In July, the Mortgage Bankers Association (MBA) updated its long-range outlook for a variety of housing and economic indicators. According to their latest predictions, the industry group estimates that the average rate for a 30-year fixed home loan in Washington and across the nation could rise to around 4.5% by the fourth of 2017.
That would be an increase of more than 50 basis points from where we are right now, at the end of July 2017. Last week, Freddie Mac reported an average 30-year loan rate of 3.96%.
Mortgage rates in Washington State could rise steadily throughout 2018 as well, if this particular forecast proves accurate. The MBA predicted an average of 4.7% during the first quarter of 2018, and projected a gradual rise in rates through the end of next year.
Freddie Mac, one of the government-sponsored enterprises that buy and sell bundled mortgage loans, also provides a long-range forecast for mortgage rates. In their latest outlook, Freddie Mac’s economists predicted that 30-year mortgage rates would average 4.2% in 2017, and 4.7% in 2018.
This closely resembles the forecast issued by the MBA, which means there is some consensus here that Washington mortgage rates and across the country will rise over the coming months. Granted, these kinds of predictions have been wrong in the past. They’re the equivalent of an educated guess – not a certainty. So bear that in mind.
Additionally, it’s important to realize that rates vary from one borrower to the next based on several factors. A person’s credit score can influence the mortgage rate they receive, as does the structure of the loan and whether or not the borrower chooses to pay points at closing. Those are three of the primary factors that can influence the rate assigned to a home loan.
Home Prices Statewide Expected to Rise As Well
The latest forecast for mortgage rates in Washington State predicts a gradual increase in borrowing costs. There is an even higher likelihood that home prices across the state will continue to rise. The current supply and demand situation is putting upward pressure on home prices, and this will likely continue in 2018 as well.
According to multiple sources, the median home value for Washington State rose by more than 10% over the last 12 months. Economists at Zillow recently predicted that home values in the state will rise by another 6% over the next 12 months, extending into July 2018.
So here we have multiple forecasts that suggest home buyers could encounter higher borrowing costs over the coming months. It seems that the cost of buying a house in Washington is likely to rise due to a variety of factors, including steadily rising home values.
These are important considerations for those who are “on the fence” about whether they should buy now or later. Obviously, you should never make such a major purchase until you are ready to do so. It requires careful research, planning and soul-searching. That said, these recent forecasts and predictions make a strong case for buying a home sooner rather than later.
Disclaimer: This article includes mortgage rate predictions for Washington State and the nation, as well as home-price projections stretching into 2018. These forward-looking statements were issued by third parties not associated with our company. We have gathered and presented them here as an educational service to our readers.