According to a recent prediction for mortgage rates in California and nationwide, borrowers might see a gradual increase through the end of 2017 and into 2018. Recently, however, California mortgage rates have been on a downward trend. So it’s a mixed bag this month. Here’s the latest news on this front.
California Mortgage Rate Predictions for April 2017 – 2018
Home buyers in California got some good news last week. According to the latest release of Freddie Mac’s weekly industry survey, mortgage rates across the country dropped for the fifth week in a row.
The average rate for a 30-year fixed home loan fell to 3.97% during the week of April 20, 2017, according to Freddie Mac. That was the lowest average of the year (to date), and also the lowest level since November of last year.
That’s the short-term trend. The long-term prediction for California mortgage rates is that we could see a gradual increase in 2017, when measured on a quarterly basis.
On April 18, the Mortgage Bankers Association (MBA) published an update of its mortgage finance forecast, which includes their predictions for 30-year home loans. MBA housing analysts and economists made a prediction that California and national mortgage rates would increase gradually over the coming months, with the popular 30-year fixed home loan averaging 4.6% by the fourth quarter of 2017.
Looking into next year, they predicted that the benchmark rate could climb above the 5% threshold sometime around the middle of 2018.
Here are their quarterly predictions for 30-year mortgage rates, as of April 2017:
- 2017, Q2 — 4.3%
- 2017, Q3 — 4.4%
- 2017, Q4 — 4.6%
- 2018, Q1 — 4.7%
- 2018, Q2 — 4.9%
- 2018, Q3 — 5.1%
- 2018, Q4 — 5.2%
Granted, this is just a forecast, and it’s based on economic conditions and expectations at the present. So a lot of things could change that might alter the mortgage rate predictions for California in 2017 and 2018. But it’s good to know what the experts are thinking!
Three Factors That Can Affect Your Rate
The rates reported by Freddie Mac, and those predicted by the MBA, are merely averages across the industry. The rate you receive for a California mortgage loan can vary based on a number of factors.
These factors include, but are not limited to, the following:
- Loan type: The type of home loan you choose can affect your mortgage rate. For example, 5-year ARM loans tend to have lower rates, at least initially, than the more popular 30-year fixed option. This is one factor that can affect the amount of interest you pay.
- Credit scores: Your credit score also plays a role. Mortgage lenders use credit scores get a sense for how a person has borrowed and repaid money in the past. Borrowers with better scores tend to get better rates, and vice versa.
- Points: It’s possible to pay discount points at closing, in exchange for a lower mortgage rate. This can be a money-saver over time, especially when the homeowner stays in the home (and keeps the original home loan) for many years.
Keep these factors in mind when looking at California mortgage rate predictions, forecasts and trends. Every scenario is different, because every borrower is different.