Mortgage Interest Rates: How Low Can They Go?

Economists at Freddie Mac, Fannie Mae, and the Mortgage Bankers Association are forecasting low mortgage rates, slowing home price appreciation, and more housing construction going well into 2020.

Economists at Freddie Mac predict the fourth quarter of 2019 will average a 3.7% interest rate on 30-year, fixed-rate loans, with 2019 claiming a 4% average overall. Fannie Mae expects the year to average out at 3.9%, while the Mortgage Bankers Association predicts 3.8%. Looking further ahead, the three organizations expect even more favorable conditions for 2020, predicting average rates as low as 3.4% (Fannie Mae).

As Freddie Mac’s economists explain, “Concerns over the resolution of trade disputes have injected volatility into global bond markets. Investors have flocked to the safety and stability of U.S. Treasuries, pushing down interest rates. As trade talks ebb and flow, rates follow. Despite the volatility in rates, we expect long-term rates to remain flat on average . . . Low treasury yields will keep mortgage rates subdued in the coming quarters.”

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