Average 30-Year Mortgage Rate to Surpass 5% Next Year, Freddie Mac Projects

The 30-year fixed-rate mortgage reached a high of 4.66 percent in the third week of May and is sitting at 4.57 percent as of June 21, according to Freddie Mac.

“Our forecast has mortgage rates slowly rising, averaging 4.9 percent in the fourth quarter of this year, and increasing to 5.4 percent by the fourth quarter of 2019,” says Freddie Mac in its just-released outlook.

The steady climb in mortgage rates have slowed recently because of declines in long-term Treasury yields, driven by tensions in Europe and uncertainty surrounding a possible trade war, Freddie Mac adds. A strong economy is helping boost interest rates, with Freddie Mac forecasting real GDP to rise to 2.6 percent and 2.5 percent in 2018 and 2019, respectively.

There remains this year “a strong underlying demand for buying a home,” the outlook report states. But Freddie Mac forecasts “modest growth in total (new and existing) home sales over the next two years. Sales are expected to increase to 6.29 million this year and 6.44 million next year.”

Read the full report.