The recent plunge in mortgage rates may help the market for home loans surge to a 14-year high, according to recent housing forecasts. In the past month, mortgage rates have posted their biggest drop in a decade, with the 30-year fixed-rate mortgage averaging 4.08 percent last week, according to Freddie Mac’s weekly mortgage market survey. The rate decline has enticed more home buyers to enter the market, prompting mortgage demand to reach its highest level since the fall of 2016. Mortgage applications jumped 18.6 percent last week as borrowers rushed to lock in lower financing costs. Mark Watson, director of forecasting for mortgage advisory firm iEmergent, predicts $1.2 trillion in home lending this year, which would be the best year since 2005. “We think the lower mortgage rates will create a huge push, partly from millennial buyers,” Watson told HousingWire. “That is going to support strong growth in home sales over the next several years.” iEmergent projects a 3.9 percent increase in total home loan volume this year. That’s more optimistic than other forecasters, such as Freddie Mac, which is predicting a 1.5 percent increase in total mortgage lending for 2019, and the Mortgage Bankers Association, which predicts a 1 percent gain. But the threat of higher mortgage rates is diminishing. The Federal Reserve announced at its January meeting that due to a slowing economy, it does not plan to raise its short-term key interest rates again this year. Therefore, mortgage rates will likely stay low for a while, which will bode well for the housing market, Watson says. “The benefits of the decline in mortgage rates that we’ve seen this year will continue to unfold over the next few months due to the lag from changes in mortgage rates to market sentiment and ultimately home sales,” says Sam Khater, Freddie Mac’s chief economist. iEmergent predictions. Visit source link at the end of the article for more information. © iEmergent

Source: Housing Wire