By Sabrina Karl
The past week has seen new mortgage forecasts released by mortgage giants Fannie Mae and Freddie Mac. And while one is a little more optimistic than the other about how low rates may go from here, they agree that rates are likely to stay in a band of historic lows all of this year and likely next.
Freddie Mac’s widely cited national mortgage rate survey is published every Thursday. Last week, the 30-year fixed-rate average dropped once again to a new low in its 50-year history. Dipping to 3.13%, it’s the fourth time the weekly Freddie Mac average has set a new record since early March.
Meanwhile, Mortgage News Daily publishes averages of its own mortgage lender survey every weekday, and on June 11, the MND average for 30-year mortgages fell below 3% for the first time ever. Dropping to 2.94% that day, it also sat below 3% for three additional days since.
Of course, the question on everyone’s mind who is considering a refinance or trying to decide timing for a new loan is whether rates have hit their bottom or will go lower still. While interest rates are notoriously impossible to predict, both Freddie Mac and Fannie Mae are forecasting they will stay low through the end of 2020, and possibly dip even lower in 2021.
Freddie Mac’s estimates are the more conservative of the two, predicting that 30-year rates will average 3.4% this year and 3.2% in 2021. The lowest previous annual averages were 3.66% in 2016 and 3.65% in 2012. In comparison, last year’s average was 4.25%.
For its part, Fannie Mae is predicting an even lower annual average rate, of 3.2% for 30-year fixed-rate mortgages, down from 2019’s 3.9%. And at this time Fannie Mae is forecasting a drop to 2.9% in 2021.