December Stock Market Corrections
The corrections in the stock market to end 2018 rolled into the beginning of 2019. This helped push money into the bond market, which resulted in lower mortgage interest rates to start in 2019.
The Fed Changes Course
The longer-term outlook on mortgage rates for 2019 seems to point to lower rates or at least to less chance of interest rates increasing due to the softer stance coming from the Federal Reserve with two rate hikes or less predicted for 2019.
Fed Chairman Jerome Powell indicated that the Fed is not on a predetermined path to raise their target rate, The Fed Funds, in 2019 which was an even softer stance than what came out of the December 2018 Fed meeting where the Fed reduced their plan of hiking their target rate in 2019 from three times down to two times.
2019 Rate Hikes Possibly Off the Table
On Friday, January 4th, Powell cited milder inflationary pressure to put the Fed in a pre-set plan to raise the Fed funds rate in 2019. This seems to indicate that the two rate hikes predicted in December could be off the table. So the Fed may not raise rates in 2019 depending on where inflation goes during the year.
This sudden change in the Fed’s plans were predicated by the large sell-off in the stock market in November and December of 2018, prior to the Fed’s rate hike in 12/19/18.
Rates May Fall with 2020 Recession
Mortgage rates will continue to rise and fall with movement in the stock and bond markets in 2019. But we may not see mortgage rates rise overall as they had dating back to 2016 with the he