Freddie Mac released the Economic & Housing Research Forecast late last week revealing that the housing market remains strong while an economic slowdown looms. Freddie Mac forecasts that 30-year mortgage rates will be 3.7% for the remainder of 2019 and will inch higher to 3.8% in 2020. Also, home sales will rise to 6 million in 2019 before increasing to 6.1 million in 2020. House prices will rise by 3.3% in 2019 and 2.8% in 2020. In conclusion, expect overall annual mortgage origination levels of $2.0 trillion in 2019 and $2.1 trillion in 2020.
Mortgage rates have been edging higher for the past two months. The 30-year fixed-rate mortgage hit 3.49% on September 6 but has recently risen to 3.78% for the week ended November 1. The uptick in rates has cut refi-eligible borrowers from 11.7 million in early September to 6.8 million in the final week of October, reports integrated technology and data analytics firm, Black Knight. The recent positive headlines from the US and China have shifted investing dollars out of the bond markets in into stocks, thus pressuring rates higher. However, despite the pull-backs, the refi-able US population is still almost 60% larger than this time last year, says Black Knight.
On the US-China trade front, Commerce Secretary Wilbur Ross said good progress is being made on the "Phase One" portion of the trade deal. The proposed deal includes licenses for US companies to do business with China's Huawei and a tariff hike on imports of foreign autos may be lifted. The US/China trade deal continues to move in the right direction and Bonds are not embracing the good news.
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