The 2020 Outlook: What to Watch for in the Coming Year
The outlook for housing and mortgage in the new year is, as always, difficult to predict. After all, in 2019 we saw interest rates drop to near record lows, something that very few people saw coming. However, based on current trends and a few fairly dependable indicators, we do know what to keep an eye on.
Mortgage Interest Rates: If the interest rates continue to remain low throughout 2020, they’ll play a big part in driving the housing market. Low interest rates will also be crucial for refinance activity in the new year. Of course, the big question is whether or not the rates will remain low. Many experts believe that the rates will rise this year, but like we said, very few people predicted that the rates would fall below 4.0 percent in 2019—and a similar situation could happen in 2020.
The Fed’s Rate Hikes/Rate Cuts: Although rate hikes or rate cuts to the key interest rate may not directly affect mortgage interest rates, any action taken by the Federal Reserve is likely to influence them. In December, the Fed decided to leave the rate at just below 1.75 percent and hinted at no new rate cuts in 2020, but that can certainly change as the year goes along.
Housing Affordability and Availability: Both affordability and availability of homes will be factors in the housing market in the coming year. In the last couple of years, affordability has been an issue for many potential first-time buyers due to rising prices. In terms of availability, entry-level homes have been in short supply as builders have been concentrating on more profitable higher-end housing. Going forward, if more first-time buyers are able to afford a home and have more inventory to choose from, the housing market as a whole will benefit.
The Economy: Although the U.S. economy does continue to grow and is considered to be healthy, we have seen some slowing in certain sectors. Also, the possibility of a recession has been talked about lately, although those fears have been tempered somewhat partially due to the Fed’s rate cuts last year. As it is every year, the U.S. economy will play a vital part in the housing market and mortgage industry.
The 2020 Elections: Historically, national elections have affected stock prices, investments, housing prices, and mortgage rates due to the uncertainty of how the incoming administration’s policies will affect the economy in general. Although the true impact of the November 2020 elections on the real estate market and mortgage industry may not be felt until 2021, it may have an effect on the last quarter of this year.
As always, keep in mind that market and economic conditions in your area may not reflect national trends. To get the best information about your area, talk to your real estate agent and mortgage professional.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
Licensed by the Commissioner of Banks - License No. MB2671
All content copyright Left Field Media. Not for reproduction, republishing or reposting.