Just recently, the United States economy survived what could be termed 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 that saw over 800,000 American workers furloughed, experts say the economy is largely unharmed. Interest rates are now expected to be on the rise.
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 a 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 Bill Clinton’s administration in 1995/96. At the time of this article,
The shutdown 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 demand for 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 in 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 a $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 scores and higher debt-to-income ratios could finally get a “yes” this year.