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Mortgage rates in New Jersey and nationwide have leveled off a bit over the past few weeks, and that trend could continue into 2019. Home prices, on the other hand, continue to climb in most of the state. Those are just two of the trends and forecasts that we are monitoring. Here’s an updated look at housing trends for New Jersey, with an outlook stretching into 2019.

Mortgage Rates Settle in the 5% Range for Now

Last week, Freddie Mac reported the results of its latest survey of the mortgage industry. According to that report, the average rate for a 30-year fixed home loan was 4.94%. That was roughly 1% higher than the first week of 2018. So rates have risen a bit since the start of this year.

Looking forward, housing analysts and economists are predicting that mortgage rates could hover within their current range for a while.

For example, the economic research team at Freddie Mac recently predicted that 30-year home loan rates would average 5.1% during 2019. The Mortgage Bankers Association (an industry group) issued a nearly identical forecast in October, suggesting that rates would hover in the low 5% range throughout next year.

Note: The trends and forecasts mentioned above pertain to industry-wide averages. The actual interest rate assigned to home loans can vary due to a number of factors (the type of mortgage loan being used, the borrower’s qualifications, etc.). Please contact us if you would like a quote tailored to your specific situation.

Home Prices Keep Rising Across Much of New Jersey

The general consensus among experts is that mortgage rates could level off over the coming months. But home prices across New Jersey are expected to continue climbing into 2019. And those projections could create a sense of urgency among home buyers planning to enter the market soon.

As of November 2018, the median home price for the state of New Jersey was around $321,000. That was a gain of about 7% from the same month a year earlier. The consensus outlook among economists is that prices will continue rising in most parts of the country during 2019.

Zillow recently predicted that the median home value in New Jersey would rise by around 6.8% over the next 12 months. This particular forecast was issued in November and extends through the fall of 2019.

If these projections turn out to be accurate, those buyers who postpone their purchases until later next year could encounter higher housing costs.

Mortgage Standards Have Eased in Recent Years

Home buyers in New Jersey who need mortgage financing will be happy to know that underwriting standards have eased. We could see additional easing during 2019 as well.

Earlier this year, Jonathan Corr from the mortgage software company Ellie Mae told the Washington Post:

“We’ve seen a very slight drop in the credit scores of approved loans, a slight increase in the debt-to-income ratios and an increase in loan-to-value, which means people are taking advantage of low down-payment loan programs.”

Debt ratios are one of those areas where standards have become more relaxed. Fannie Mae and Freddie Mac have both increased the debt-to-income ratio limits for the mortgage loans they buy from lenders.

Fannie and Freddie also increased the maximum loan-to-value ratio to 97% for some borrowers. This means eligible home buyers could qualify for a conventional loan with a down payment as low as 3%.

Those are just two examples of how the mortgage industry has become more flexible in recent years. Overall, the industry is more flexible today than in previous years.

So based on all of this, the 2019 housing market in New Jersey could be marked by rising home prices, relatively stable mortgage rates, and a general easing of mortgage standards.

Disclaimer: This article includes forecasts and projections relating to the housing market and broader economy. Those statements were issued by third parties not associated with our company. We have presented them here as an educational service to our readers.