Prediction: 30-Year Mortgage Rates Above 4% By End of 2015?

Are you planning to buy a home in the near future? Need a home loan to finance your purchase? If so, you might want to think about doing it sooner rather than later. The average mortgage rate for a 30-year fixed home loan rose again this week, nearly reaching 4%. This is according to the latest mortgage market survey conducted by Freddie Mac, published earlier today.

The 30-year rate average has been hovering below 4% since the end of July 2015. Rates could remain low going into 2016, giving home buyers more time to save. But there’s also a strong chance the 30-year average will rise above 4% by the end of this year. In fact, several analysts have made mortgage predictions to this effect — and that includes the economists at Freddie Mac.

Current Rates: 30-Year Average Approaches 4%

As of November 12, 2015, the average rate for a 30-year fixed home loan has risen to 3.98% (with an average of 0.6% fees and points at closing). That’s an increase of 11 basis points, or 0.11%, over last week’s average.

This is based on the weekly mortgage market survey conducted by Freddie Mac, the government-controlled corporation that buys and sells mortgage securities. This long-running survey dates back to the 1970s and is one of the best indicators of lending rates and trends.

Here are the average rates in four loan categories, as of November 12:

  • 30-year fixed mortgage: 3.98%
  • 15-year fixed mortgage: 3.20%
  • 5/1 adjustable (ARM) loan: 3.03%
  • 1-year ARM loan: 2.65%

A Fairly Stable Year, So Far

To give you some perspective, the current 30-year mortgage rates are only slightly higher higher than they were at the start of the year. So 2015 has been a pretty stable year, as far as long-term interest rates go.

On January 8, 2015, for example, Freddie Mac was reporting an average rate of 3.73% in the 30-year fixed mortgage category. That was only slightly lower than the current average reported earlier today.

This flies in the face of earlier predictions that mortgage rates would rise steadily throughout 2015 — that just hasn’t happened. Keep this in mind when mortgage analysts make additional predictions for 2016, as they inevitably will. You have to take these forward-looking statements and forecasts with a grain of salt. As we’ve seen, they don’t always pan out.

And speaking of those predictions…

Prediction: Mortgage Rates Above 4% by the End of 2015?

Many economists expect the average 30-year mortgage rate to climb above 4% by the end of this year. Freddie Mac’s own research team made a similar prediction earlier this week. According to their forecast, the average rate for a 30-year home loan will hit 4% between now and the end of 2015.

Looking even farther out, here is what Freddie Mac expects 30-year mortgage rates to do over the course of 2016:

  • Q1 2016: 4.0%
  • Q2 2016: 4.2%
  • Q3 2016: 4.4%
  • Q4 2016: 4.6%

These numbers came from Freddie Mac’s “Economic and Housing Market Outlook” issued on October 26, 2015. But again, they’ve been wrong in the past.

Attributed to Sean Becketti, chief economist, Freddie Mac.

“Recent commentary suggests interest rates may rise in the near future. Janet Yellen referred to a December rate hike as a ‘live possibility’ if incoming information supports it. The October jobs report to be released this Friday will be one crucial factor influencing the [Federal Reserve’s] decision.”

The Bottom Line for Home Buyers

No one can predict the future of mortgage rates with complete accuracy. Economists can (and frequently do) make educated guesses based on current trends and conditions. But these predictions are still only guesses. You can’t bank on them.

With that being said, the general consensus among industry watchers is that mortgage rates will rise gradually between now and the end of 2015, followed by a slow-but-steady rise in 2016. If that’s the case, home buyers might benefit from buying sooner rather than later.

Disclaimers: This article contains third-party data that are deemed reliable but not guaranteed. It also contains predictions and forecasts relating to long-term mortgage rates. Such statements are the equivalent of an educated guess and should not be viewed as facts. The Home Buying Institute makes no claims about future interest rates or mortgage trends.