Curve

March 2019 mortgage rates forecast (FHA, VA, USDA, Conventional)

Tim Lucas
The Mortgage Reports editor

Mortgage rates forecast for March 2019

Mortgage rates have quietly hit one-year lows.

The surprising thing is that mortgage consumers aren’t jumping on these rates.

Sure, mortgage applications increased more than three percent the week of February 20 according to the Mortgage Bankers Association. But this is a tiny increase after an 11% decline over the previous four weeks.

Rates are in the low 4s according to Freddie Mac, and there’s no guarantee they’ll stay that low.

Mortgage rate authorities predict a big swing for rates in March 2019. But the direction of the swing is unclear.

Don’t want to risk it? Shop lenders now and lock in as soon as possible.

Compare Rates From Top Rated National Lenders and Save (Feb 22nd, 2019)

Predictions for March

March will be a wild ride for mortgage rates. Market-moving news will leave rates different than they were in February. The only question is, will they be more or less favorable for mortgage shoppers?

Skip to:

 

Rate forecasts for 2018 pretty much came true. Most major housing and financial authorities predicted rates somewhere between 4.7% and 5.0%.

That’s right about where everything ended up. The same housing agencies that were “spot on” with their forecasts in 2018 are predicting rates in the low- to mid-5s this year.

The funny thing is, though, that rates have been dropping since late 2018. If we’re going to end up with 5% rates in 2019, they should start rising any day. And that’s what mortgage shoppers are afraid of.

Been looking for a good rate on a refinance or home purchase? Now might be the time to lock.


Mortgage Rate Forecast March 2019


Mortgage rates hit 378-day lows. Will they stay rock-bottom?

Mortgage rates haven’t been this low since the week of February 8, 2018, more than one year ago.

Freddie Mac reports 30-year fixed rates sank to 4.35% the week of February 21, 2019. This is a rate you could get a few months ago only by accepting a 15-year fixed or adjustable rate loan. Thirty-year fixed loans were close to the 5% mark as recently as November.

The question mortgage shoppers are asking is, “Will rates stay this low?”

There’s no way to say for sure. But there is a high chance that rates could zoom up at any time.

According to Mortgage News Daily, a prominent source of technical mortgage rate analysis, rates have been in a holding pattern for weeks and are ready to make a big move one way or another by mid-March.

Sure, that move could be lower. But with four months of dropping rates, chances are that this trend is waning and could reverse course soon.

If I were to give advice to a mortgage shopper right now, it would be just three words: “Lock, lock, lock.”

If I were to give advice to a mortgage shopper right now, it would be just three words: “Lock, lock, lock.”

That’s because I’ve seen this pattern so many times. Rates drift downward for months. No one notices. Then one day, rates rocket higher and everyone rushes to lock in. By then it’s too late.

Rates tend to jump faster than they fall. The average consumer probably sees a similar but inverse path of the stock market. The Dow rises slowly over a period of months, then falls 1,000 points in a day.

The rule of thumb is: Favorable conditions come slowly, unfavorable ones fast.

Bottom line: 

If you’re thinking about a home purchase or refinance, don’t wait for lower rates. These may be the best rates we see this year.

Show Me Today's Rates (Feb 22nd, 2019)

What’s causing low rates?

It’s obvious that mortgage rates are low. But “why” is the question that even experts are scratching their heads about.

The stock market is once again approaching all-time highs, inflation is steady, and unemployment keeps hitting 40-50 year lows.

But markets are always forward-looking. They are less concerned with what’s happening now than about what will happen in six, 12, or 18 months.

Investors know there are serious concerns about the economy.

China: US-China relations are strained after never-ending negotiations about trade and tariffs. No fewer than three major global financial organizations — the International Monetary Fund, the World Bank and the Organization for Economic Cooperation and Development — have lowered economic forecasts, citing strained relations between the world’s two biggest economies.

Consumers: U.S. consumers aren’t helping the situation. December retail sales were abysmal. They fell nearly 2% when a small increase from November was expected. It was the largest drop in retail sales since 2009.

The Fed: The world’s most powerful financial regulatory body is now saying it needs to be “patient” before ratcheting up rates or siphoning off assets it collected during the last recession. The Fed has been primarily optimistic about economy, but seems to be changing its tune. The group meets again March 19-20, so markets could swing with any post-meeting updates.

These factors are dragging down rates, but major changes in any one of them could cause rates to start rising again.


The Fed calls for slower rate hikes in 2019

The Federal Reserve is not as confident in the future as it used to be.

In December, it raised rates, but backed off its forecast to hike rates three additional times in 2019. Now, it projects just two increases.

The Fed adjourned the first 2019 session on January 30 and released minutes from the meeting in late February.

The minutes indicated that the group was backing off continuous rate hikes for now. That helped mortgage rates. Additionally, the group said it would be “patient” in additional actions that might slow economic development.

This is the kind of sentiment that lends to low rates.

The group adjourns its next meeting on March 20 at 2:00 PM ET so watch for rate swings and be ready to lock.


Federal Reserve Fed Funds Rate Predictions


Will rates continue to drop?

It’s a possibility. However, according to Freddie Mac, rates are already at 12-month lows as of the time of this writing. Lower rates are becoming less likely.

There’s a greater chance that rates will rise again soon. In the chart below, major housing authorities predict higher rates. If these agencies are correct, rates will start a march upward in coming months.

Shop and Compare Today's Rates and Save (Feb 22nd, 2019)

Mortgage rate trends as predicted by housing authorities

Housing agencies nationwide are calling for rates in the low- to mid-5s for 2019. Only one agency is predicting a mild increase of 4.8 percent.

Agency 30-Yr Rate 2019 Prediction
National Association of Realtors 5.3%
National Association of Home Builders 5.2%
Mortgage Bankers Association 5.1%
Freddie Mac 5.1%
Fannie Mae 4.8%
Realtor.com 5.5%
Average of all agencies 5.17%

To sum it up, everyone is predicting higher rates. Today’s rate might be as good as we’ll see for years to come.


Mortgage Rate Predictions 2019 from Leading Housing Authorities

Advice for March 2019

Knowing what will happen in March is only half the battle. As a mortgage rate shopper, you need to know the best actions to take this month.

Homeowners might finally be eligible for a refinance

Refinance shoppers warmed the bench in 2018.

Rates were too high for most homeowners to benefit. Unless they needed a huge amount of cash via a cash-out refinance, they didn’t touch their 4% mortgage.

But a window of opportunity is opening again.

As of the time of this writing, mortgage rates were as low as in February 2018 according to housing agency Freddie Mac. Thirty-year mortgage rates averaged just 4.35 percent for the week of February 21.

Mortgage rates are down nearly 60 basis points (0.60%) since their November highs.

That’s a savings of more than $100 per month on a $300,000 loan.

If rates keep dropping, refinance shoppers may be enticed to pull the trigger. That’s especially true for those getting into a 15-year loan or turning their home equity into cash via a cash-out refinance. Still others may refinance to cancel their PMI or because their credit has improved.

How low do rates have to go before you consider a refinance? It depends on your current rate, of course. But, if you can save $100 per month or more, it’s worth looking into.

Compare Rates From Top Rated National Lenders and Save (Feb 22nd, 2019)

Mortgage lenders are more likely to approve your loan

Because rates rose in 2018, lenders are desperate.

Mortgage refinance applications are down more than 30% compared to one year ago, according to the Mortgage Bankers Association.

For this reason, home purchase and refinance applicants should try and try again if they get denied. Remember: shopping for a mortgage is like shopping for anything else. There are hundreds of sources from which you can buy. If you are denied, try again.

Mortgage companies are likely to stir up business by loosening guidelines in 2019. Higher debt-to-income ratios and lower credit scores may be allowed.

Frustrated mortgage applicants could finally get a “yes.”

Loan product rate updates

Many mortgage shoppers don’t realize there are many different types of mortgage rates. But this knowledge can help home buyers and refinancing households find the best value for their situation.

Following are updates for specific loan types and their corresponding rates.

Conventional loan rates

Conventional refinance rates and those for home purchases are still low despite recent increases.

According to loan software company Ellie Mae, the 30-year mortgage rate averaged 5.04% in January.

This is higher than Freddie Mac’s 4.35% average because it factors in low credit and low-down-payment conventional loan closings, which tend to come with higher rates. Additionally, the most recent Ellie Mae report shows rate levels before they started dropping.

Lower credit score borrowers can use conventional loans, but these loans are more suited for those with decent credit and at least 3% down. Five percent down is preferable due to higher rates that come with lower down payments.

Twenty percent of equity is preferred when refinancing.

With adequate equity in the home, a conventional refinance can pay off any loan type. Got an Alt-A, subprime, or high-PMI loan? A conventional refi can take care of it.

For instance, say you purchased a home three years ago with an FHA loan at 3.5% down. Since then, home values have skyrocketed.

You refinance into a conventional loan (because you now have 20% equity) and eliminate FHA mortgage insurance.

This could be a savings of hundreds of dollars per month, even if your interest rate goes up.

Getting rid of mortgage insurance is a big deal. This mortgage calculator with PMI estimates your current mortgage insurance cost. Enter 20% down to see your new payment without PMI.

Show Me Today's Rates (Feb 22nd, 2019)

FHA mortgage rates

FHA is currently the go-to program for home buyers who may not qualify for conventional loans.

The good news is that you will get a similar rate — or even lower one — with an FHA loan than you will with conventional.

Related: Read more about FHA costs and requirements on our FHA loan calculator page.

According to loan software company Ellie Mae, which processes more than 3 million loans per year, FHA loan rates averaged 5.05% in January, while conventional loans averaged 5.04%.

Another interesting stat from Ellie Mae: About 30% of all FHA loans are issued to applicants with scores below 650.

FHA loans come with mortgage insurance. But the overall cost is not much more than for conventional loans.

A little-known program, called the FHA streamline refinance, lets you convert your current FHA loan into a new one at a lower rate if rates are now lower.

An FHA streamline requires no W2s, pay stubs, or tax returns. And you don’t need an appraisal, so home value doesn’t matter.

Learn more about the FHA streamline refinance here.

Show Me Today's Rates (Feb 22nd, 2019)

VA mortgage rates

Homeowners with a VA loan currently are eligible for the ever-popular VA streamline refinance.

No income, asset, or appraisal documentation is required.

If you’ve experienced a loss of income or diminished savings, a VA streamline can get you into a lower rate and better financial situation. This is true even when you wouldn’t qualify for a standard refinance.

But don’t overlook the VA loan for home buying. It requires zero down payment. That means if you have the cash for closing costs, or can get them paid for by the seller, you can buy a home without raising any additional funds.

Don’t overlook the VA loan for home buying. It requires zero down payment.

VA mortgages are offered by local and national lenders, not by the government directly.

This public-private partnership offers consumers the best of both worlds: strong government backing and the convenience and speed of a private company.

Most lenders will accept scores down to 620, or even lower. Plus, you don’t pay high interest rates for low scores.

Quite the contrary, VA loans come with the lowest rates of all loan types according to Ellie Mae. In January, 30-year VA mortgage rates averaged just 4.83% while conventional loans averaged 5.04%

Check your monthly payment with this VA loan calculator.

There’s incredible value in VA loans.

Compare Rates From Top Rated National Lenders and Save (Feb 22nd, 2019)

USDA mortgage rates

Like FHA and VA, current USDA loan holders can refinance via a “streamlined” process.

With the USDA streamline refinance, you don’t need a new appraisal. You don’t even have to qualify using your current income. The lender will only make sure that you are still within USDA income limits.

More about the USDA streamline refinance.

Home buyers are also learning the benefits of the USDA loan program for home buying.

No down payment is required, and rates are ultra-low.

Home payments can be even lower than rent payments, as this USDA loan calculator shows.

Qualification is easier because the government wants to spur homeownership in rural areas. Home buyers might qualify even if they’ve been turned down for another loan type in the past.

Shop and Compare Today's Rates and Save (Feb 22nd, 2019)

Mortgage rates today

While a monthly mortgage rate forecast is helpful, it’s important to know that rates change daily.

You might get 4.4% today, and 4.5% tomorrow. Many factors alter the direction of current mortgage rates.

To get a synopsis of what’s happening today, visit our daily rate update. You will find live rates and lock recommendations.

This month’s economic calendar

The next thirty days hold no shortage of market-moving news. In general, news that points to a strengthening economy could mean higher rates, while bad news can make rates drop.

  • Tuesday, March 5: New Home Sales
  • Friday, March 8: Nonfarm Payrolls, wages, unemployment rate
  • Tuesday, March 12: Consumer Price Index (a key inflation gauge)
  • Wednesday, March 20: Federal Reserve meeting adjourns
  • Friday, March 22: Existing Home Sales
  • Thursday, March 28: GDP

Now could be the time to lock in a rate in case these events push up rates this month.

What are today’s mortgage rates?

Low mortgage rates are still available. You can get a rate quote within minutes with just a few simple steps to start.

Compare Rates From Top Rated National Lenders and Save (Feb 22nd, 2019)

 

Selected sources:

  • https://www.columbian.com/news/2019/feb/21/resumption-of-high-level-u-s-china-trade-talks-raises-hopes/
  • http://www.mortgagenewsdaily.com/consumer_rates/899754.aspx
  • https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm