Most home sales in Ponte Vedra Beach make use of a conventional or jumbo mortgage. We asked our favorite loan officer for insight into what to expect next year for mortgage rates. Here's what he had to say:
Forecasts for mortgage interest rates for 2019 and beyond are all over the map. Ranging from an expectation of between 5.3% and 6% by year end 2019 all the charts agree on one thing - mortgage rates will continue to rise through the next two years! At this time last year, the professional forecasters were predicting that rates would be between 4.375% and 4.75% by year end 2018; however, most lenders actually tipped over the 5% rate this past week for the traditional 30-year mortgage.
So, from a recent historical perspective, rates at year-end last year were in the 3.75% to 4% range, the first time 4% was achieved consistently in several years. This year was the first time in many, many years that 5% was reached.
Let’s examine what best case and worst case projected increases for 2019 mean for your potential 30-year mortgage if you wait another year to make a home purchase in Ponte Vedra:
Rates increase by .5 of a point – say from 4.8 current average to 5.3%. For every $10,000 you borrow, your monthly payment would be about $3.10 higher, in essence $31.00 at $100,000, and $155.00 at $500,000. On the surface that may not sound like much, but $155.00 X 12 X 30 = $55,800 over the life of the loan.
At the full 1% increase (while not an exact science), for purposes of this discussion, you may double the increases at every amount borrowed. For example, $100,000 = $62.00, $500,000 = $310.00, making the lifetime cost of the higher interest rate = $111,600.
To keep track of how rates might be trending next year you can watch 10-year treasury yields. This data is readily available each day and is much easier than trying to look online for a mortgage rate that may not be accurate. It is good to know that historically mortgage rates are about 1.5% to 2% above the 10-year treasury yields on any given day. The treasury yield was 3.2% most recently, and according to many sources, is expected to rise to be 3.6% by this time next year.