Expected Mortgage RatesAnticipated mortgage interest rates
According to the latest US economic figures from Capital Economic, interest rates are expected to rise, slowing down consumer spending and capital spending in 2019. Capital Economies said the 2-year Treasury return rose to 2.82% from 2.63% at the beginning of September. 10-year returns rose to 3.08% from 2.84%.
The mortgage rates generally develop in line with the 10-year treasury, which means that mortgage rates are likely to rise further. It is expected that the US Federal Reserve will raise interest rates a further two further time this year and a further two in 2019. Rising interest rates are already adding to higher credit prices for household ers and companies.
The latest Freddie Mac primary mortgage market study poll revealed that mortgage rates have risen for the forth straight week. Mortgage rates have risen for the third time in a row. President Donald Trump will levy a 10% duty on 200 billion dollars of China's import on Monday. It is expected that the Chineses will strike back with a customs duty of 5 -10% to 60 billion US dollars in US dollars in export, according to Capital Economics.
In addition, the US has already sworn to react to the situation in China by imposing duties on the vast majority currently imported from China. By the beginning of next year, Capital Economics thinks that China could possibly have a 25% duty on all imported goods. Combination all these elements and interest rates are likely to rise throughout 2018 to 2019 and beyond.
Mortgages are rising amid weaker than expected housing figures
Recent U.S. Census Bureau and Department of Housing and Urban Development residential construction figures showed a weaker-than-expected recovery as residential construction increased 0.9% in July to a seasonal average of 1.168 million homes per year. Thirty-year mortgage interest rates increased to 4.792 from 12:45 ET.
Moreover, the June reviews showed that residential construction slowed to a 1.158 million units, its low since September 2017. Also, the 5-year variable interest conventionally floating mortgage rose to 4.313. Increasing rates have been coupled with a recent sharp rise in property values, which have brought a grip on those summers of property buying and selling activities that tend to be on an upward trend.
NAHB/Wells Fargo housing opportunity index (HOI) data shows that this combined high price and interest rate environment contributed to reducing affordable residential property to a 10-year low in the second half of 2018.