The Experts Speak: 2018 Mortgage Rate Forecasts for California

It has been several months since we published our last mortgage rate forecast for California. So clearly an update is warranted. Below, we have rounded up the latest mortgage rate predictions for California and the nation, provided by two expert sources. These projections extend into the fall of 2018.

A Look at Current Mortgage Rates in California

Before we get to the 2018 mortgage rate forecasts for California, let’s take a look at where we are right now. This will give us a frame of reference, for comparison purposes.

According to the most recent survey conducted by Freddie Mac, the average rate for a 30-year fixed home loan was 3.94% for the week ending on November 3, 2017. Rates vary based on the type of loan being used (among other factors). But the 30-year fixed is by far the most common type of loan used by home buyers in California. So that’s the one we will focus on today.

Thirty-year mortgage rate averages have been hovering below 4% since July 2017. But that could change over the coming months, as we swap out our calendars from 2017 to 2018. In fact, several forecasts for mortgage rates in California and across the nation are predicting a gradual rise ahead.

Forecasts & Predictions from Two Key Sources

On October 24, 2017, the Mortgage Bankers Association (MBA) published an update to its long-range finance forecast. They offer outlooks for a variety of housing and economic indicators, including 30-year mortgage rates.

According to their latest forecasts, the industry group expects mortgage rates to climb above 4% by the end of this year. Looking beyond that, they expect the average rate for a 30-year fixed home loan to reach 4.8% by the fourth quarter of 2018.

Here are the MBA’s quarterly predictions for mortgage rates in California nationwide:

• Q4, 2017 — 4.1%
• Q1, 2018 — 4.3%
• Q2, 2018 — 4.6%
• Q3, 2018 — 4.7%
• Q4, 2018 — 4.8%

MBA economists expect rates to rise gradually over the coming months. But they don’t expect them to rise above 5% until sometime in 2019.

The latest mortgage rate forecast from Freddie Mac, published on October 23, also points to a gradual rise in rates as we move into 2018. Freddie Mac is one of the two government-sponsored corporations that buy home loans from lenders. Their economists expect that 30-year mortgage rates will end up averaging 4.0% for 2017, and will rise to an average of 4.4% during 2018.

Meanwhile, Home Prices in the State Continue Rising

The latest California mortgage rate forecasts will no doubt get the attention of future home buyers, since they predict higher borrowing costs ahead. But that’s not the only trend for buyers to keep an eye on. Home values across the states have also been on the rise in recent months. And many economists are predicting that they will continue climbing in 2018 as well.

According to the real estate information company Zillow, the median home value for California rose to $509,600 as of October 2017. That was an increase of 7.3% from the same month a year before. The company’s economists are predicting a continued, yet more gradual, rise in house prices going forward. They expect the median value to climb by another 2.4% over the next 12 months, ending in October 2018.

Disclaimer: This article includes mortgage rate forecasts for California and the nation, extending into 2018. These projections were provided by third parties not associated with our company. We have gathered and presented them here as an educational service to our readers. Actual rates assigned to home loans can vary due to a number of factors, including the borrower’s credit standing.