Crying Wolf — Again — on Mortgage Rates

WSJ: “Average Rate on a 30-year, Fixed-Rate Mortgage was 3.75% Last Week, Down from 4.94% in November”

Sooner or later, industry mavens predicting higher mortgage rates will be right.

But not this year.

From a peak of almost 5% late last Fall, rates fell to 3.75% last week.

Count that the 4th (7th? 9th?) year in a row that the consensus expectation of higher rates has been confounded.

It sort of recalls the line about economists predicting 9 out of the last 5 recessions.

Winners & Losers

For Buyers, the drop interest rates translates into a hefty increase in their purchasing power.

In turn, that suggests a tail wind for home prices later this Summer and Fall, benefiting Sellers as well.

The one potential fly in the ointment?

The reason for the drop in rates — namely, concerns about a slowing U.S. and especially global economy.

P.S.: One unalloyed beneficiary of lower rates: existing homeowners (and borrowers) who are now candidates to refinance their current mortgage.

See also, “The Federal Reserve’s Gift to Summer 2019 Home Buyers (Sellers, Too).”



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