In the last month, mortgage rates have fallen to their lowest monthly averages in more than three years, and economists predict they’ll stay there well into 2020—and even possibly lower. Last week, the 30-year fixed-rate mortgage averaged 3.65%, down 1.06 percentage points from a year ago, Freddie Mac reports.
The lower rates are translating into savings for home buyers. For example, the average borrower taking out a $300,000 mortgage is unlocking savings of about $225 on their monthly payments, or about $2,700 per year, CNBC reports. Freddie Mac economists predict that 30-year rates will average 3.7% in the fourth quarter of 2019, Fannie Mae predicts rates to average 3.9%, and the Mortgage Bankers Association is forecasting a 3.8% average.
Next year, according to Fannie Mae, rates could drop as low as 3.4%. “Rates fell for most of this year, and lower rates have translated into a stronger housing market,” notes Freddie Mac economists. “Both home sales and housing construction are firming. We expect a significant increase in mortgage refinance originations in the coming quarters.”
As mortgage rates drop, forecasters also expect home price growth to moderate. Fannie Mae, Freddie Mac, and the MBA all predict home price growth to slow to 2.2% appreciation by 2021. Home sales are expected to remain elevated. The National Association of REALTORS® is forecasting existing-home sales to rise 0.6% in 2019 and by another 3.4% in 2020.