Mortgage Rate Forecast for January 2019: How Will the Year Begin?

December 9, 2018 | By Brandon Cornett | © 2020, QualifiedMortgage.org

Mortgage rate forecasts for January 2019 suggest that 30-year mortgage rates could hover between 4.7% and 4.85% next month. Beyond that horizon, two industry groups have predicted that the average rate for a 30-year fixed home loan will hover around 5.1% for much of 2019.

Mortgage Rate Forecast Through January 2019

During the first week of December 2018, Freddie Mac reported the results of its latest survey of the mortgage industry. This long-running survey goes out to a variety of lenders across the U.S., and includes credit unions, commercial banks and mortgage lending companies. 

In that early-December report, Freddie Mac’s research team reported that the average rate for a 30-year fixed mortgage loan was 4.75%. That was a decline of six basis point (0.06%) from the previous week’s average of 4.81%.

This dip was partly the result of investors shifting away from stock market turbulence for the relative stability of Treasuries.

To put those numbers into a broader historical context: During the first week of 2018, the average rate for a 30-year loan was 3.95%. So it rose quite a bit over the course of the year (to date).

Did you know? While there are many different variations of home loans available today, the conventional 30-year fixed-rate mortgage is by far the most popular product among borrowers. That’s why it is featured so often in news reports, forecasts, etc.

And now here we are at the end of the year, with 2019 only three weeks away. So what’s the forecast for mortgage rates through January 2019?

In November, the Mortgage Bankers Association (MBA) published its latest “Finance Forecast,” which includes their predictions for 30-year mortgage rates over the coming months. Their forecast is broken down by quarters. It suggests that the average rate for a 30-year home loan will be 5.1% during the first quarter of 2019. But that’s their prediction for the quarter as a whole, averaged out over three months. It’s also quite a bit higher than where we are right now.

Minor Fluctuations Ahead?

Given current economic and mortgage-industry trends, it seems unlikely that rates could jump that high as early as January 2019. It seems more likely that the 30-year fixed mortgage loans would have an average rate fluctuating between 4.7% and 4.9% in January 2019. At present, there doesn’t appear to be very much upward pressure on long-term home loan rates. So it’s hard to envision a large increase between now and January 2019. Minor fluctuation seems more likely.

The Federal Reserve plays a role in all of this as well. While the Fed does not control mortgage rates directly, their policies can shift investor demand one way or the other, which in turn can put (upward or downward) pressure on mortgage lending rates.

As Danielle Hale, chief economist for Realtor.com, recently told the The Washington Post:

“Looking forward, as markets interpret [Fed] Chairman Powell’s speech last week as an indicator of fewer rate hikes than previously expected, mortgage rates are likely to see less upward pressure…”

Disclaimers: This article contains mortgage rate forecasts through January 2019 and beyond. Those predictions were largely provided by third parties outside of our company. Rate forecasts are the equivalent of an educated guess. Such information is provided on an “as is” basis, with no warranties of any kind whatsoever. The publishers of this website make no claims or assertions about future economic or mortgage-industry trends.