California Mortgage Rate Forecasts Into 2019: Experts Predict a Slight Increase

Mortgage rate forecasts for California and the rest of the nation suggest that borrowers could see higher rates in 2019, compared to where we are right now. Meanwhile, home prices in California continue to rise, giving buyers a sense of urgency.

Here’s a look at current trends, followed by some new predictions for California mortgage rates extending into 2019.

A Look at Current Trends: Second Half of 2018

On August 27, 2018, the mortgage buyer Freddie Mac published the results of its latest nationwide rate survey. According to that report, the average rate for a 30-year fixed home loan rose slightly to land at 4.52% for that week. “Slightly” is the key word in that sentence. The average rate rose by just one basis point (or 0.01%) over the previous week.

According to the company’s latest update: “The 30-year fixed-rate mortgage barely inched up this week, continuing the summer trend of essentially being flat.” Thirty-year mortgage rates have been hovering between 4.5% and 4.6%, on average, for the last few months. So we’ve seen some stability on this front.

That’s where we are right now, in late summer 2018. Looking ahead, the latest predictions for mortgage rates in California and nationwide suggest that they could creep upward over the coming months.

Predictions for California Mortgage Rates in 2019

Freddie Mac’s economists recently offered a forecast that 30-year fixed mortgage rates would average 5.1% in 2019, after averaging 4.6% in 2018 (to date).

The Mortgage Bankers Association (MBA) also updated its long-range outlook for mortgage rates recently. They expect 30-year home loan rates to average 4.9% during the first quarter of 2019, and climb to around 5.2% by the fourth quarter of next year. That forecast was issued on August 14, 2018.

Granted, no one can predict future economic or housing trends with complete accuracy. So we probably shouldn’t get too wrapped up in the exact numbers that are being projected here. It’s the general consensus that’s more relevant to future home buyers. And the consensus forecast for California mortgage rates is that they could rise a bit over the coming months.

Rising Home Prices a Bigger Concern for Buyers

If you’re thinking about buying a home in California during 2018 or 2019, you’ll want to keep an eye on house prices. They could keep rising, and that might be a bigger factor than mortgage rates.

Home prices in most California cities have risen steadily over the last few years. According to the real estate information company Zillow, the state’s median home value rose to $541,800 in August 2018. That was 7.3% higher than the same month a year earlier.

Obviously, prices are much higher than that in some markets, such as the Bay Area. But it’s the overall trend here that’s most important. And that trend can be summed up with two words — continued appreciation.

Related: Average down payment in California cities

Economists are predicting that California home prices will continue to rise through 2018 and into 2019. So while the latest mortgage rate forecasts might not create a huge sense of urgency for buyers, these home price predictions should certainly get their attention. It makes a pretty good argument for buying sooner rather than later.

Disclaimer: This article includes mortgage rate predictions for California and the rest of the nation extending through 2019. Those projections were issued by third parties not associated with our company. We have gathered them here as an educational service to our blog readers.