Real Estate Predictions: How Will the Mortgage Market Change in 2020?

Jacques Poujade's Real Estate Predictions

With 2020 underway, homeowners and lenders are paying close attention to the mortgage market. As a real estate investing professional for 30 years, and a Managing Partner at LendPlus, I’m also closely watching the trends, to see how the mortgage market will change in 2020. I look at the industry from the perspective that all families deserve to find a financing solution that suits their individual needs. The good news – it looks like 2020 will be a good year for the housing market in general, according to economic predictions. Mortgage rates should stay low, and one big trend- there may not be enough new homes for buyers in general. Let’s break it down.

Mortgage Rates

Jacques Poujade's Real Estate Predictions

Almost all housing economists agree that 30-year fixed mortgage rates will stay below 4%. It’s likely rates won’t decrease much. But the Federal Reserve isn’t expected to make any big changes anytime soon, and the mortgage market usually follows the lead of the Fed. If mortgage rates stay low, this could lead to more people being able to afford a home. Even if the economy weakens, the rate likely won’t fall below 3.5%, and most estimates show they will hover around 3.85%.

Low Rates Lead to High Competition

Real Estate Predictions: How Will the Mortgage Market Change in 2020?

Because mortgage rates are expected to stay low, this could lead to increased competition for housing. Some economists expect we’ll see more bidding wars. Along with low mortgage rates, there is generally a lack of new homes being built, and homeowners are staying in their homes for longer. Some numbers show one in four offers will see a bidding war in 2020.

Low Rates Will Slow Refinance Market

Economic predictions show that it’s very likely the refinance market will see a slowdown, because of the mortgage rates, and purchase applications will see an uptick.

Low Rates Good For Renters

Because mortgage rates are expected to remain low, renters may see some good news in 2020. Since more people will be able to afford homes, there will likely be less competition for rental units.

Strong Housing Market Outlook

Jacques Poujade's Real Estate Predictions for 2020

All in all, the housing market for 2020 looks to be strong. Most experts agree that the economy is doing well, with indicators such as strong employment, higher highhold incomes, and high consumer confidence levels. 


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Overall Outlook

It does seem apparent that mortgage rates will stay before 4% in 2020, a trend that could encourage lending, and more competition for homes. That being said, there is a clear deficit when it comes to new homes, and not enough new homes were built for consumers in 2019. If you’re looking to sell in 2020, the market may be just right for you, since economists are expecting more competition all around.


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