Recent mortgage rate trends have captured the attention of home buyers and mortgage shoppers across Washington State. During the first two months of 2018, average mortgage rates rose by nearly half a percentage.
Will borrowing costs continue to rise in 2018? Or will they level off a bit? Here are some recent insights and forecasts for Washington mortgage rates and nationwide.
A Big Jump at the Start of 2018
At the end of 2017, the average rate for a 30-year fixed mortgage loan was hovering just below 4%. In fact, it was below 4% for most of last year.
But starting in January 2018, mortgage rates in Washington State and nationwide began to climb steadily and hit 4.4% by the third week of February. (This is based on Freddie Mac’s long-running survey of the lending industry, which reports averages. Rates can vary from one borrower to the next.)
That brings us up to the present. When this article was published, on March 3, the average rate for a 30-year fixed home loan had reached 4.43%. Borrowing costs rose for other mortgage products as well, including the slightly less popular 15-year fixed home loan, and the 5-year adjustable-rate mortgage (ARM).
Forecast: Mortgage Rates Hovering in the Mid 4% Range?
These recent trends have many home buyers and mortgage shoppers asking the same questions: What will mortgage rates in Washington do over the coming months? Will they continue rising throughout 2018, or level off at their current range?
While no one can predict future rate trends with complete accuracy, there have been quite a few forecasts published lately. One of them comes from Freddie Mac’s economic research team. They recently predicted that 30-year loan rates would average 4.6% during 2018, and 5.1% during 2019.
While mortgage rates in Washington State have risen sharply over the last few weeks, that doesn’t necessarily mean they’ll continue along that path. In fact, Freddie Mac’s economists pointed this out in their latest outlook report:
“As of February 22, the rate on the latest U.S. weekly average 30-year fixed mortgage rate was 4.40 percent, up 0.45 percentage points since the start of the year. Over the past few years, we’ve had episodes … where mortgage rates surged over four percent, only to fade off their local peaks back below 4 percent. But perhaps things will be different this time and rates might sustain their upward trend.”
“Perhaps” is the key word in that last sentence. We can make educated guesses about what rates might do, based on current and expected conditions within the economy. But at the end of the day, it’s still just a guess.
Home Prices Will Likely Keep Rising
So, will mortgage rates in Washington State keep rising throughout 2018? A lot of forecasters have predicted a gradual rise between now and the end of 2018. But only time will tell. The recent uptick that occurred during the first two months of 2018 caught some people off guard, so it could upset their forecasting models and predictions as well.
Washington home prices, on the other hand, will very likely continue to rise throughout 2018. This is especially true in the Seattle metro area, and other major cities where inventory remains tight.
Strong demand and limited supply pushed prices north throughout 2016 and 2017. And they’re expected to keep rising during 2018 as well. Zillow, for example, recently predicted that the median home value for Washington State would rise by 4.4% over the next 12 months (through February 2019).