NJ Housing Outlook 2019: Mortgage Rates Leveling, Home Prices Rising

Mortgage rates rose steadily during the first half of 2018, and have since leveled off a bit. Looking forward, a new round of industry forecasts suggest that mortgage rates in New Jersey and nationwide could hover just below the 5% range for much of 2019.

Mortgage Rates Up Since the Start of 2018

On average, mortgage rates have risen by roughly 1% since the start of this year. The average rate for a 30-year fixed home loan was 3.95% during the first week of January, according to Freddie Mac. That average had risen to around 4.94%, as of mid-November 2018.

Those who are planning to buy a home next year are probably wondering: What are mortgage rates in New Jersey expected to do in 2019? Will they rise gradually over the coming months, or continue to hover within their current range?

While there’s no way to answer such questions with certainty, a pair of new mortgage rate forecasts have shed some light on the subject. Here’s what the experts are predicting, as of November 2018.

Forecasts Predict That Rates Could Hover Just Below 5%

No one can predict future rate movements with complete accuracy. There are too many variables involved, and those factors are ever-changing. But there does seem to be a general consensus among industry analysts. And those forecasts suggest that rates could remain relatively stable over the coming months.

The first forecast came from the Mortgage Bankers Association (MBA). Last month, the industry group predicted that the average rate for a 30-year fixed mortgage in New Jersey and nationwide would average as high 5.1% in 2019.

The economic research team at Freddie Mac offered a nearly identical outlook recently. In an October 2018 news release, the group stated: “The 30-year fixed-rate [home loan] is expected to average 4.5 percent in 2018, rising to perhaps as high as 5.1 percent in 2019.”

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

The “twin” forecasts calling for an average rate of 5.1% in 2019 aren’t far off from where we are now. When this article was published in November 2018, the Freddie Mac industry forecast was showing an average rate of 4.94% for the standard 30-year mortgage loan. So clearly some economists expect to see relative stability over the coming months, in terms of rate changes.

Some Homeowners Could Still Refinance

In 2019, the mortgage market in New Jersey and nationwide is expected to be dominated by purchase loans (i.e., those used by home buyers). That’s due to the rise in interest rates mentioned earlier.

But there are still some homeowners out there who could benefit from refinancing their existing loans. A November 2018 press release published by the analytics firm Black Knight showed that “1.86 million mortgage holders have an interest rate incentive to refinance…”

The two mortgage industry forecasts cited earlier suggest that rates will hover within the low 5% range well into 2019. So many of the homeowners with an incentive to refinance right now might still benefit from refinancing in 2019.

Meanwhile, New Jersey Home Prices Keep Climbing

Mortgage rates in New Jersey could remain fairly level as we move into 2019. That would be good new for home buyers planning to finance a purchase. But house values across the state continue to climb. So there is still some urgency for those in the market to buy.

According to the latest data, the median home price for the state of New Jersey was around $321,000 as of November 2018. (Though it rises sharply as you move toward the NYC metro area.) That was an increase of around 7% from the median price a year ago. Home values are expected to continue rising into 2019 as well.