January 2020 Mortgage Market Update - Forecasting Housing and Interest Rates for 2020
This is our first market update of 2020. HAPPY NEW YEAR. Here is what we are hearing and seeing as far as interest rates and housing for this year.
Federal Reserve
In 2019 the Federal Reserve dropped the federal discount rate for the first time in a long time. If you look back over the course of last year, the Federal Reserve dropped the Federal Fund Rate three times. What is important to remember is that the Federal Rate does not directly impact mortgage rates, although, it did indirectly help rates come down in 2019.
As we move forward into this next year, we don’t anticipate the Federal Reserve to drop the Federal Rate anymore, as things are going pretty well. However, we do continue to see that mortgage rates are staying relatively low.
The Elections
As we get closer to the November election, there could be some volatility in the financial markets depending on how the elections go. Currently we are not seeing a lot of concern there but, we will continue to give you updates on what we are seeing happen and how it effects interest rates and the housing market.
Housing
One thing we are seeing in 2020 is that homes are becoming more affordable, especially in northern California. With home prices starting to level out, wages increasing and mortgage interest rates staying low, many people who are purchasing in 2020 are looking at a lower monthly payment than that of last year.
Those out there that are still renting are seeing their rents increase, as property owners try to reach current market rental values, in response to the new rent control law. Now would be a good time to see if you are ready to purchase because some people are finding that their rent is about the same as a mortgage payment would be (or lower). Overall, the stability of home values in 2020 should stay pretty strong.
Recession
There has been a lot of talk over the last couple years about a possible recession however, right now there’s not too much concern. Generally, rates go down during a recession, so if we did have one, the market would still stay stable. A recession is not currently in the headlines however, a lot of things could change as we head into the election.
As always, If you have any questions please give me a call. I’m always happy to help.