Tampa Mortgage Rates Will Impact the Housing Market

So what are the Tampa mortgage rates for 2018?

Trying to predict where interest rates are headed should probably be left to fortune tellers and crystal balls, though it’s unlikely serious economics would resort to this practice.

But there is agreement among economists that mortgage interest rates – which are still at historic lows – played a crucial role in helping boost home sales to record numbers throughout 2017, as more and more buyers realized they could lock in affordable monthly payments on a new home over a 30-year period.

There is a sense of hope among economists that if the economy performed well in 2017, then 2018 should offer a repeat of the good times.


Where are mortgage rates headed next year?

Many economists predict mortgage rates could rise next year, pointing to the likelihood that the Federal Reserve will raise interest rates, particularly with stocks booming and the economy on the rise. The Fed’s aim would be to help keep inflation in check in what could become an overheating economy.

So what does that mean for home buyers, home sellers, homeowners interested in refinancing their mortgage in 2018, and the overall economy?

In all probability, economists say the impact should be minimal considering that if rates do rise, they will be coming up from historic lows. In early November, mortgage buyer Freddie Mac reported that the average rate on 30-year, fixed-rate mortgages slipped to 3.9 percent, from 3.94 percent a week earlier. That rate was higher than a year ago, when it was 3.57 percent, but was still considered very low by historic standards. Before the recession hit in 2008, long-term rates were typically closer to 6 percent.

In addition, the average 30-year fixed-rate mortgage just fell four basis points, and the 15-year fixed rose one basis point, according to a NerdWallet survey of daily mortgage rates.


Predictions for a healthy market in 2018

The National Association of Realtors, which recently held its annual convention in Chicago, sees a healthy housing market in 2018 regardless of where mortgage interest rates land. NAR just published its outlook for 2018, and their Chief Economist, Lawrence Yun, predicted 5 percent median home price growth in 2018, slightly lower than NAR’s prediction of a 6 percent growth rate in 2017.

But he also predicted higher home resales in 2018 – up to 5.7 million homes sold, higher than this year’s estimated 5.5 million resales. Yun also forecasts 700,000 sales of newly built homes in 2018, up from 600,000 this year.
CoreLogic is projecting something similar, that home prices will rise by 4.7 percent in 2018.


What a strong housing market means for interest rates

The CoreLogic Home Price Index is forecasting that mortgage rates will increase by about 70 basis points by next summer. CoreLogic noted that, an inflation-adjusted typical mortgage payment would rise from $816 paid in August 2017 to $908 by August 2018, an 11.3 percent year-over-year gain. That means by the middle of next year, home buyers would see a larger chunk of their incomes going to their mortgage payments.

In part, economists note, this would be a reflection of the economy’s strengths. Among the factors we’re seeing are:

  • Because of Tampa mortgage rates, we can expect a very strong job market, with the nation’s unemployment rate at 4.1 percent in October
  • Mortgage credit that has become more available to qualified borrowers
  • Home prices that have been rising all year, even during the summer months when sales slowed because of low inventory
  • Low inflation despite the strong economic growth


How does low inflation impact housing?

That last factor is critical. Although inflation remains low today, the tightness in the job market is worrisome to the Federal Reserve, which is concerned about an increase in inflationary pressures. There are expectations that the Federal Reserve could raise rates at least three times in 2018.

However, CoreLogic also predicted that throughout 2018, 30-year mortgage rates will still be below 5 percent, considering they are currently at such historic lows. This still puts long-term mortgages below the pre-recession levels.

However, not all economists are in unison on this. Some economists are waiting to see what Congress does in terms of tax reform, and what it could mean for the home buying market. The National Association of Realtors came out against plans to cut the mortgage interest deduction in half, to loans of $500,000 or less, and the National Association of Homebuilders raised the same objections.

However, it’s not clear what Congress will approve, or when. So the outlook for that issue remains murky.


How is Florida’s economy looking for 2018?

There were serious questions raised in September about whether the devastating impact of Hurricane Irma would damage Florida’s otherwise strong economy.

However, Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business, noted that third quarter gross domestic product growth came in at 3.0 percent, indicating that the rebuilding from the major storms that hit Florida, Texas and Louisiana has actually boosted GDP numbers as the rebuilding process continues.

University of Central Florida economist Sean Snaith has projected that Florida’s economy would continue to accelerate at a faster pace than the nation’s for the next four years, becoming a $1 trillion economy by 2018. Snaith also predicted that the Florida economy would expand at an average annual rate of 2.9 percent through 2019, becoming a $1.074 trillion economy by 2019. That would make Florida’s economy the 16th largest in the world.

Snaith said one of Florida’s great strengths was the housing market, as well as very strong job growth. As a matter of fact, one of the strongest regions of the state this year has been Tampa Bay. The unemployment rate there is just 3.3 percent, which indicates full employment, and the city remains a center for strong job growth. This will continue to attract more people moving to Tampa Bay in search of job opportunities – and housing.


Tampa Mortgage Rates

While most economists believe interest rates are likely to rise in 2018, there’s a great deal of uncertainty over when, and by how much. The ambiguity over what Congress will pass in its tax reform package has only made the overall picture even murkier.

What we do know is that long-term mortgage rates remain at historic low, so those who purchase a home now can lock in a very affordable monthly payment on a 30-year mortgage. Now is the time to jump into the housing market, especially since prices are expected to continue to rise in 2018.

Contact Domain Homes today at 813-580-8111, to learn more about the homes we have available in some of Tampa Bay’s most sought-after and desirable neighborhoods.

At Domain Homes, we procure older, dilapidated homes in well-established neighborhoods like South Tampa, West Tampa, North Hyde Park, the Heights, and St. Petersburg. We replace them with brand new, move-in ready homes that are close to top rated school districts, amenities, shopping, and downtown Tampa.

Call us today. We can help you find your dream home in Tampa Bay.

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