RTC Mortgage Blog

3 Trends to Drive the Mortgage Market in 2018

It may seem early for 2018 predictions but Freddie Mac's Economic and Housing Research Group are out with their forecast for next year. 

They expect the economic environment to remain favorable for housing and mortgage markets, with moderate economic growth of about two percent, solid job gains, and low mortgage interest rates. 

They see three trends driving the 2018 mortgage market:

1. An increase in purchase mortgage volume;
2. Some cooling of rate refinance activity, and
3. more borrowers tapping their home equity.

They further say: Increases in the volume of purchase mortgages will be the result of modest gains in both home sales and home price growth.  Thus far in 2017, home sales are the highest in a decade, but are unlikely to grow by much going forward. 

Inventory problems will continue to limit sales in the short term and longer-term trends like the aging of the population and declining mobility across all age groups will hold down existing home sales. 

Anticipated increases in mortgage rates will slow down refinance activity. The primary reasons for refinancing are: to obtain lower rates; shorten the term of the loan; and, to obtain additional cash to remodel, consolidate debt, or pay off student loans.

Chart of National Home Appreciation Rates 2000 – 2018 (est)