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Monday 11/20/2017 Mortgage Rates

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2017 Mortgage Rate Forecasts for January & the Year Ahead

The current expert predictions all point to a steady year for 2017 with no major shift in mortgage rates. After the most recent predictions were made by Freddie Mac and Fannie Mae, the rates jumped 0.75 basis points above 2016's yearly average. The sudden jump was attributed to an underestimated Trump victory, although, Freddie Mac and Fannie Mae submitted fairly moderate projections for all quarters of 2017 and 2018.

As early as last week the 10-year Treasury yield went up by 10 basis points, and the 30-year mortgage rate followed soon thereafter by the same number. 

Home sales decreased by 2.8% last December, which Freddie Mac suggests drove the 30-year mortgage rates up.

Trend of Mortgage Rates Over the Last Year

The Current Rates for Fixed and Adjustable Mortgages 

At this time of last year, the rate for 30-year mortgages was 3.79%. The current rates for the same type of mortgage went up from last week's 4.09% to 4.19%.

The rates for 15-year fixed rate mortgages went up 0.6 points from 3.34% to 3.40%, where last year saw rates for this mortgage average around 3.07%. 

If you're looking for more lenient rate options, 5-year adjustable rate mortgages dropped 0.1 points from the 3.21% of last week to a current 3.20%. That's 0.3 basis points higher than the rates seen at this time of last year (2.9%).

Fannie Mae's 2017 & 2018 Mortgage Rate Forecast

Based on the Housing Forecast report released this month, Fannie Mae has predicted all quarters of this year to hover between 4.2% and 4.3% for 30-year fixed rate mortgages, and 3.3% and 3.5% for 5-year adjustable rate mortgages.

 Year 2017 2018
 Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
 Mortgage Rates (%)
 30-Year Fixed Rate Mortgage 4.2 4.2 4.2 4.3 4.3 4.3 4.3 4.4
 5-Year Fixed Rate Mortgage 3.3 3.3 3.4 3.5 3.5 3.6 3.7 3.7

As the Federal Reserve normalizes its policies, interest rates are expected to rise going forward into 2017 and 2018. The main concern to draw, however, is the income appreciation with respect to the rate of growing house prices which are projected to drop from 5.9% of last year to 4.7% of this year. Nevertheless, the rate of growing income won't be able to keep up with the rate of rising house prices, which will prove challenging for new homeowners in 2017 and 2018. 

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