The housing market remains strong, with strengthening home sales and what is likely to be the lowest annual average for mortgage rates in more than 40 years, according to new data from Freddie Mac.
“The housing market remains a bright spot for the U.S. economy, with solid job gains and low mortgage interest rates sustaining the economy's momentum in September,” said Sam Becketti, chief economist at Freddie Mac. “In most markets, low mortgage rates have more than offset the rise in house prices, preserving homebuyer affordability for the typical household. Homeowners are also taking advantage of low rates and house price appreciation that is increasing their home equity. The share of cash-out refinances grew to 41 percent in the second quarter of 2016, compared to 38 percent in the first quarter and 15 to 20 percent during the housing crisis.”
Freddie Mac is projecting that the 30-year fixed rate mortgage will average 3.6% in 2016, the lowest annual average in more than four decades. Those low rates are helping to make up for continued price gains. According to Freddie Mac, falling mortgage rates have “more than offset the rise in house prices in most markets, helping to preserve homebuyer affordability.”
Freddie also projected that mortgage originations will hit $2 trillion in 2016. That’s the highest total since 2012.