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February Mortgage Rate Forecast In The U.S.

Just recently, the United States’ economy survived what could be termed as the longest government shutdown in its entire history. To make matters worse, so-called trade tensions between the Chinese and the American government have played a role. The mortgage rate environment is very unpredictable. Now that the government is resuming operations from a shutdown which saw over 800,000 American workers furloughed, experts say the economy is largely unharmed. Interest rates are now expected to be on the rise.

Photo of monitor with chart
While rates remain at historical lows, they will move higher during 2019.

In 2018, the predictions for mortgage rates by top financial houses such as Zillow and Freddie Mac were largely true. This year may follow suit. All signs say that February is going to be a lot different from January. The market continues to be favorable for home buyers and real estate investors. If you’re considering a home purchase or refinancing, lock your rate right now.

The Shutdown Might be Good Omen to Mortgage Shoppers

As mentioned earlier, the U.S. government shutdown of 2018/19 has been the longest in its history. It has lasted 35 days surpassing the 21-day shutdown of the Bill Clinton’s administration in 1995/96. As at the time of this article, USATODAY reported that over 800,000 federal workers went home without a paycheck during the shutdown. There was an estimated 0.13% reduction in quarterly growth during each week of the shutdown.

The shutdown has covered over 27% of the economic growth of the country in the first quarter of 2019. How this affects the economy in the long run is uncertain but will definitely have an effect.

In a business summit held by real estate investors in Seattle last Thursday, Viktor Rybachuk, Cofounder of iwillbuyhouse.com stated:

“What this means is that the economy will be left unstable for a while and investors will have to deal with an unpredictable economy by buying bonds with stable and fixed returns.”

This could be favorable to mortgage shoppers as mortgage interest rates will fall as a result of the high demands of these bonds, Rybachuk added.

A Chance For Homeowners to Refinance

For a good part of 2018, homeowners across the country were unable to refinance their houses as the rates remained so unfavorable. Recent reports from Freddie Mac show the 30-year rate averaged just 4.45 percent for the week of January 17.

There are some signs that the rates will continue to decrease as the coming months. However, the current rates should be convincing enough for any shopper seeking to refinance. Depending on your situation, you can actually save up to $100 every month on $300,000 loan.

Mortgage Lenders May Loosen their Guidelines

Due to the persistence of lower interest rates, some mortgage lenders are desperate. The Mortgage Bankers Association (MBA) shows there is almost a 30% reduction in the number of refi applications. However, mortgage lenders are set to loosen up their strict guidelines in 2019. This means that disappointed applicants with low credit score and higher debt-to-income ratio could finally get a “yes” this year.

About the author

Tre Pryor, Editor-in-Chief

Tre Pryor is the recognized expert Louisville Realtor who can:
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