Fall Predictions: Mortgage Rates Will Remain Flat for Rest of 2014

by UrbanTurf Staff

As fall approaches, there are a number of questions floating around about the DC area housing market. Will inventory continue to come online making it a buyer’s market? Will the slew of new apartments entering the rental market push rents down? Will mortgage rates head higher as experts have predicted?

With these questions in mind, each day this week UrbanTurf will be hearing the predictions and trends that local industry professionals believe will play out in the fall market.

Fall Predictions: Mortgage Rates Will Remain Flat for Rest of 2014: Figure 1

Mortgage Rates Will Remain Flat for the Rest of 2014

By Bill Slosberg, First Savings Mortgage

Last year ended with many experts forecasting an increase in mortgage rates during 2014. This was based on an expectation of rising employment and GDP numbers. However, this has not turned out to be the case. On January 2, Freddie Mac reported 4.53 percent with an average 0.8 point on a 30-year mortgage, a rate that they haven’t reached or eclipsed in 2014.

Beginning in mid-April, mortgage rates began a slow descent, spending most of the summer at around 4.125 percent with an average 0.5 point. The descent occurred despite six straight months of employment reports showing monthly gains of over 200,000 new jobs. Many experts were forecasting that the jobs number would continue to increase and the Federal Reserve would finally start raising short term rates in the spring of 2015. Then the world starting falling apart with the Mideast crisis, the Russian/Ukraine dispute and the sudden awareness by the public of the danger the United States faces from the growth of ISIS.

The September employment report showing the creation of a disappointing 142,000 new jobs was another wake up call. Interest rates declined rapidly after the news but soon a general dismissal of the accuracy of the report caused interest rates to retreat to their previous levels.

With all of this uncertainty, I predict that mortgage interest rates will remain at their current level for the remainder of the year. Despite the lack of confidence in the September employment report, big investors will wait for the October report with its expected revisions to this month’s report. Assuming that report shows the jobs number back around 200,000, big investors will want to see what comes out in November and December to confirm that August was an aberration.

Current weather forecasts are for another harsh winter which would slow the economy overall, as well as home sales and employment, I expect the 2014 fourth quarter GDP number and the 2015 first quarter GDP number to be below expectations. That should give the Fed pause, moving back any announcement of an increase in short term rates to at least the third quarter of next year. And if it is not clear that the economy is definitely back on track, I think the Fed will wait until 2016. Historically, since 1990, the Federal Reserve has been extremely reluctant to raise interest rates in the fourth quarter for fear of slowing the economy during the all-important holiday purchasing months.

It is important to note that the mortgage market tends to move several months before the Federal Reserve takes action, assuming it is pretty clear what the Fed is about to do. So I predict that homeowners and potential homeowners will experience a stable mortgage rate environment for at least the next twelve months. And when mortgage rates rise, the increase will be much smaller than usual.

This article originally published at https://dc.urbanturf.com/articles/blog/fall_market_predictions_mortgage_rates_will_remain_flat/8943

DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!

Northern Virginia

Profiles of 14 neighborhoods across Northern Virginia

Looking to Give People A Reason to Stay Past 6pm
Happily Straddling the Line Between City and Suburb
Columbia Pike
Arlington’s Neglected Stepchild is Getting a Makeover
Crystal City
Turning Lemons into Lemonade
Lyon Village
Developing An Air of Exclusivity?
Hitting Its Growth Spurt
An Urban Village Hitting Its Stride
Del Ray
Virginia’s Small Town Near the Big City
Eisenhower Avenue
The Vibrancy Might Take a Few Years
The Quiet Neighborhood By the Beltway
Old Town
Mayberry By The Potomac
132 Commerical-Free Acres
Downtown Falls Church
Staying the Same in the Midst of Change
Tysons Corner
Radical Change Could Be On The Way

See more Northern Virginia »


Profiles of 14 neighborhoods in suburban Maryland

Small-Town Living in the State Capital
Bedroom Community Gets Buzzing Cache
Cabin John
In With The New While Maintaining the Old
Chevy Chase
Affluence, Green Lawns and Pricey Homes
Downtown Silver Spring
Experiencing a Resurgence After a Bumpy History
A Suburb on Steroids
Rockville Town Square
Despite the Dynamism, Still Somewhat Generic
Takoma Park
More Than a Little Bit Quirky
A Foodie Magnet on the Verge of Change
Capitol Heights
Kudzu, Front Porches and Crime
Glass Half Full or Half Empty?
Mount Rainier
Artists, Affordable Homes and A Silo Full of Corn
National Harbor
A Development Rises Next to the Potomac
Riverdale Park
A Town Looking For Its Identity

See more Maryland »

Northwest DC

30+ neighborhood profiles for the city's biggest quadrant

16th Street Heights
DC's Sleeper Neighborhood
Where (Almost) Everyone Knows Your Name
AU Park
One of DC’s Last Frontiers Before the Suburbs
DC’s Northern Neighborhood on the Cusp
DC’s 535 House Neighborhood
Cathedral Heights
Do You Know Where That Is?
Chevy Chase DC
Not to Be Confused With the Other Chevy Chase
Cleveland Park
Coming Back After A Rough Year
Columbia Heights
DC’s Most Diverse Neighborhood, But For How Long?
An Island of Serenity East of the Park
Dupont Circle
The Best of DC (For a Price)
Foggy Bottom & West End
Where the Institutional Meets the International
Forest Hills
Ambassadors and Adventurous Architecture
Foxhall Village
350 Homes Just West of Georgetown
Friendship Heights
A Shopping Mecca With a Few Places to Live
History, Hoyas and H&M
Glover Park
One of DC’s Preppier and More Family-Friendly Neighborhoods
A Posh View From Embassy Row
LeDroit Park
A Quiet Enclave in the Middle of the City
Logan Circle
Trendy Now, But Not By Accident
Mount Pleasant
Sought-After Homes Surround Main Street in Transition
Mount Vernon Triangle
From Seedy to Sought-After
The Long, Skinny Neighborhood at the City’s Northwest Edge
Park View
It’s Not Petworth
Penn Quarter/Chinatown
DC’s Go-Go-Go Neighborhood
Getting a Vibrancy of Its Own
The Duke’s Former Stomping Ground
Shepherd Park
DC’s Garden of Diversity
Spring Valley
A Suburb With a DC Zip Code
Not To Be Confused With Takoma Park
Not Quite Like Its Neighbors
U Street Corridor
The Difference a Decade Makes
Woodley Park
Deceptively Residential
Adams Morgan
No Longer DC’s Hippest Neighborhood, But Still Loved by Residents

See more Northwest DC »

Southwest DC

The little quadrant that could

Southwest Waterfront
A Neighborhood Where A Change Is Gonna Come

See more Southwest DC »

Northeast DC

Profiles of 10 neighborhoods in NE

New Development Could Shake Up Pastoral Peace
A Little Bit of Country Just Inside the District’s Borders
Not to Be Confused With Bloomingdale
Fort Totten
Five Years Could Make a Big Difference
H Street
A Place To Party, and To Settle Down
The Northeast Neighborhood That Few Know About
Michigan Park
A Newsletter-On-Your-Doorstep Community
Evolving from a Brand to a Neighborhood
Ripe for Investment Right About Now
The Difference 5 Years Makes
Big Houses, A Dusty Commercial Strip and Potential

See more Northeast DC »

Southeast DC

6 neighborhoods from Capitol Hill to East of the River

Capitol Riverfront
Still Growing
Hill East
Capitol Hill’s Lesser Known Neighbor
Congress Heights
Gradually Rising
Notable for Its Neighborliness
Historic Anacostia
Future Promise Breeds Cautious Optimism
Eastern Market
A More European Way of Living

See more Southeast DC »