Friday, 14 of December of 2018

Economics. Explained.  

Mortgage Rate

December 5, 2018

Right after the election in November 2016 mortgage rates  jumped quickly from 3.5% to 4.2% as market participants believed that President Trump’s proposed individual and corporate income tax cuts.  repatriation of corporate earnings currently locked overseas, and significant relief from the currently onerous regulatory burden, would boost GDP growth significantly, boost inflation, and push long-term interest rates higher.  Additional Fed tightening this year coupled with a gradual increase in inflation has boosted the 30-year mortgage rate to 5.0%

We expect the Fed to leave the funds rate at 2.2% at its meeting next week, but then increase rates three times in 2019 which would boost the funds rate to 3.0%.  If that is the case and inflation remains fairly steady, we expect the 30-year mortgage rate to climb to 5.3% by the end of 2019/.

 

 

Stephen Slifer

NumberNomics

Charleston, SC


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