WASHINGTON – May 23, 2019 – This year's borrowing costs will likely be lower than originally predicted, according to an updated forecast from Freddie Mac.
The GSE recently downgraded its forecast for the 30-year fixed-rate mortgage, projecting it will average 4.3% in 2019 – below last year's average of 4.5%.
In addition, Freddie Mac economists predict only a small average rate increase in 2020, with 30-year fixed rates averaging 4.5% next year.
"The combined positive impact of low mortgage rates, a strong labor market, low unemployment and modest wage growth supports our forecast for a steadily growing housing market in 2019," Freddie Mac says in its May 2019 Forecast report.
The declining interest rates are expected to help reverse a decrease in mortgage originations that occurred in 2018. Freddie Mac researchers note this will "continue to provide an impetus to first-time homebuyers as well as homeowners looking to refinance."
Freddie Mac projects that 2019 home sales will surpass 2018 levels and reach 5.98 million units, with most of the increase will come from existing-home sales. Freddie Mac's forecast remains flat for housing starts this year, however, at 1.26 million units.
Source: "A Steadily Growing Housing Market," Freddie Mac's May 2019 Forecast (May 2019)
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