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 life of 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 life time 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.