How low will mortgage rates go?

Updated: Oct 10, 2019

ORIGINALLY PUBLISHED -- 08/14/2019

This feels a bit odd.

The average mortgage rate on a 30-year fixed rate loan has dipped to as low as 3.55% this past August, the lowest it's been in 3 years. Hell, just 8 months ago in November, rates were almost 5%.

The Fed decided to cut the rate over the summer.

The economy must be struggling, right? Unemployment rising? Stock market down?

Nope.

These (and many more economic indicators) tend to be reasons the Fed cuts rates, historically. Usually, there is an effort to spike the economy (and housing market). General consensus among lenders, once the dust settled, is that mortgage rates had already factored in a Fed rate cut long before it was official.

The cut was only a quarter of a point, after all. This seems preventative rather than reactive. That's a new approach and we'll see how that works out. And rates may have already dropped in anticipation of this cut that has been rumored for months. Access to information in this day and age, primarily on the internet, can tip consumers before word-of-mouth has time to take effect solely due to anticipation.

Okay. So how low could they go? Well the all-time weekly low was back in 2012 at 3.31%. That is not that long ago. Freddie Mac has it going up to the low 4's by the end of the year. Financial market expert, Barry Habib, predicts the high 2's.

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©2019 by RYAN DEMAGISTRIS 

ARLINGTON VA REAL ESTATE AGENT & CONSULTANT