May 2019 Economic Forecast

April 2019 marks the 4th consecutive month of strong growth in the equity markets. The 10-year U.S. Treasury rate which informs 30-year fixed mortgage rates, increased slightly to 2.54% from 2.49%. As we anticipated in our previous commentary, mortgage rates stayed relatively flat with minor increases toward the end of the month. The fact remains that current mortgage rates are extremely accommodating when considered against the average rates over the last 12 months. Lower rates and continued wage growth should translate into stronger home sales over the next two quarters. The recent Fed meeting occurred May 1st and did not result in any material shift in tone and there was little change in mortgages rates. Our prediction is that rates may move up or down slightly throughout May, but the end result will be a relatively flat month-over-month change.  

Mortgage Product

Primary Rates*

Investment Rates*

30yr Fixed

3.875%

4.625%

15yr Fixed

3.5%

4.375%

10/1 Arm

3.75%

4.75%

7/1 Arm

3.625%

4.625%

*Own Up’s Home Composite reflects actual rates provided to homebuyers & existing home owners for the week ending 4/30/2019 for purchase transactions with borrowers of 740+ FICO, single-family homes with a 10% down payment. Everyone’s scenario is different, so please reach out to a Home Advisor for your personalized rate quote.

Newsworthy Articles

Pending Home Sales Jumped 3.8% in March
Own Up Abstract: No surprise here.  The data confirms what we thought: rates in March coming in at the lowest level in 12 month. This creates a strong incentive for buyers to move off the sidelines.

Strong U.S. Growth, Weak Inflation Leave Fed Stuck Happily on Hold
Own Up Abstract: Strong recent data has lessened any belief the Fed could actually lower rates as urged by President Trump.  Inflation is coming in around 1.5%, below the 2% target, which further supports the Fed likely holding rates constant to get a clear picture on inflation before raising rates.  

San Francisco Home Prices Fell for the First Time in 7 Years
Own Up Abstract: The year-over-year average home price fell by 0.1% in March. Markets with higher home prices are very sensitive to interest rate changes.  From March 2018 to March 2019, interest rates were much higher on average than they had been the preceding year, softening demand and eligibility for mortgages.  However, mortgage rates returned to lower levels recently so we don’t anticipate this trend continuing.

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