2017 Mortgage Rates Are Expected to Stay in the 4% Range

January 31, 2017 No Comments »
2017 Mortgage Rates Are Expected to Stay in the 4% Range

Before you panic, take comfort in the fact that mortgage rates probably won’t do too much in 2017, just as they haven’t in recent years, despite stark predictions telling us otherwise.

I went ahead and compiled the 2017 mortgage rate forecasts of Fannie Mae, Freddie Mac, the Mortgage Bankers Association, and the National Association of Realtors to determine what we might expect this year.

Interestingly, these four groups all seemed to get a bit more conservative this year, perhaps learning from past mistakes when they made much bolder predictions.

Well, aside from Fannie Mae, which seemed to get it right last year while the other three had called for 30-year fixed rates closer to 5% to close out 2016.

Fannie predicted a rate of 4.1% to end the year, which is pretty darn close to where we’re at today.

As it stands now, the 30-year fixed is averaging around 4.19%, this according to the weekly survey from Freddie Mac.

The good news is all four of the forecasts expect the 30-year to stay within the 4% realm throughout 2017, and in fact, in 2018 as well.

The only thing we have to worry about is them being wrong again, though this time they could prove to be too modest, only for us to be unpleasantly surprised to the upside.

In any case, there’s a good chance we’ll see some choppiness in 2017, so it’ll be important to stay on top of rate movement to ensure you lock at the right time.

2017 Mortgage Rate Prediction from Fannie Mae

Fannie Mae got it the closest last year, so let’s see how they think 2017 will shape up.

First quarter 2017: 4.2%
Second quarter 2017: 4.2%
Third quarter 2017: 4.2%
Fourth quarter 2017: 4.3%

As you can see, Fannie Mae is forecasting flat mortgage rates this year, with a tiny bit of movement in the fourth quarter. If they’re right again, refi volume will defy expectations (again) and those purchasing homes will continue to benefit from very low rates.

Their 2018 forecast calls for a slight bump to 4.3%.

2017 Mortgage Rate Prediction from Freddie Mac

Freddie Mac is playing it safe this year after predicting a 4.7% 30-year fixed to close out 2016.

First quarter 2017: 4.2%
Second quarter 2017: 4.2%
Third quarter 2017: 4.2%
Fourth quarter 2017: 4.2%

Now they expect the 30-year fixed to completely flat-line at 4.2% throughout the year, though there will obviously be ups and downs along the way.

Their 2018 forecast is a slightly higher 4.5%.

2017 Mortgage Rate Prediction from the MBA

The Mortgage Bankers Association is the most daring of the predictors this year, calling for a 30-year fixed at 4.7% by December 2017.

First quarter 2017: 4.3%
Second quarter 2017: 4.4%
Third quarter 2017: 4.6%
Fourth quarter 2017: 4.7%

Ironically, this is lower than the 4.8% rate they expected at the end of 2016…

Their 2018 forecast keeps the 30-year fixed just under 5%, at 4.9%.

2017 Mortgage Rate Prediction from the NAR

Finally, we have the National Association of Realtors, who expect fairly tame mortgage rate movement this year.

First quarter 2017: 4.1%
Second quarter 2017: 4.3%
Third quarter 2017: 4.4%
Fourth quarter 2017: 4.6%

They don’t see rates moving more than .50% from now until the end of the year, which is great for those looking to get a hold of a low rate before “it’s too late.”

Their 2018 forecast is also pretty favorable, with the 30-year only expected to average 4.8%.

So, there you have it. The 2017 forecasts are in and they don’t look half bad, assuming you like low interest rates.

The big question is if, after being mostly wrong year after year, they’ve made adjustments that could come back to bite them.

But with plenty of uncertainty still in the air, there’s a good chance mortgage rates won’t make any decisive moves this year, meaning opportunity will continue to present itself.

It’s also an inauguration year, which could be good news for mortgage rates.

Bonus: Redfin, which just launched a mortgage company, expects the 30-year fixed to go “no higher than 4.3 percent” this year, which is in line with some of the other predictions.

(photo: patricia m)

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