Michigan Mortgage Rates Banks are Offering Today and Predictions for 2016

So far, Michigan’s real estate market is off to a promising start in 2016. A lot of it has to do with Michigan mortgage rates, which continue to be extremely low. Although home prices have rebounded nicely since the recession and housing crisis, low rates continue to make housing relatively affordable. The question, however, is will this continue to be true throughout the year? All signs seem to point to another year of reasonably low rates, but various factors could cause them to spike before the year is through.

What are Current Michigan Mortgage Rates?

Michigan mortgage rates

Michigan mortgage rates for 30-year mortgages are currently holding steady at around 3.7%. When viewed from an historical perspective, that’s one of the best rates that the state has ever seen. Still, it is a bit higher than it was a few years ago, which has many people wondering whether they will rise higher still in 2016. Between rising home prices and potentially rising mortgage rates, Michigan home buyers should probably act quickly for the best deals.

What were the Historical Mortgage Rates in Michigan?

Michigan mortgage rates

While the entire country suffered under the recession and housing crisis, Michigan was hit particularly hard. Low mortgage rates were one of the few bright spots. In 2010, however, Michigan’s average 30-year mortgage rate was 5.06%, which was among the worst in the country. In 2011, it was 4.51%, and the state ranked 15^th. The following year, the average rate dropped to 3.60%, and Michigan ranked 9^th in the country.

Michigan mortgage rates have remained fairly steady more recently:

August 2015 – 4.0%
September 2015 – 3.98%
October 2015 – 3.90%
November 2015 – 3.99%
December 2015 – 4.01%
January 2016 – 4.02%

While rates had been creeping up toward the end of 2015, they appear to have dropped a little recently. This does not, however, mean that they will continue to do so.

What Will the Federal Reserve Do in 2016?

Michigan mortgage rates

The main thing affecting Michigan mortgage rates–and mortgage rates in all states–is whether or not the Federal Reserve decides to bump up long-term interest rates. In December, the agency moved to increase short-term rates for the first time in nine years, which caused many to predict that they’d act similarly regarding long-term rates in the not-too-distant future. However, they didn’t act at their first meeting of 2016, which took place in mid-January. Their next meeting will be in March, but because inflation is expected to remain low, energy prices are expected to keep dropping and global financial markets continue to struggle, most experts doubt that the Fed will raise rates much–if at all.

What is the 2016 Michigan Mortgage Rates Forecast?

A number of credible sources have predicted that mortgage rates will remain steady throughout most of 2016. Bob Walks, chief economist for Detroit-based Quicken Loans, recently stated that he expects rates to remain low through the spring. Greg McBride, chief financial officer for Bankrate.com, stated that he expects the 30-year mortgage rate to hover around 4.1% and 4.2% for most of the year. Keith Gumbringer, vice president of HSH.com, which is a mortgage information website, predicted that the 30-year mortgage rate would likely peak around 4.625% by the end of 2016. This would represent a major increase over the historic low of 3.52%, which happened in May 2013, but it is still very low in the scheme of things.

What are Michigan Real Estate Market Trends for 2016?

Of course, mortgage interest rates are just one piece of the puzzle when it comes to understanding Michigan’s real estate market. According to a report by the Federal Housing Finance Agency, Michigan has enjoyed one of the fastest rising housing markets in the country over the last five years. Indeed, Michigan was one of just six states that experienced major increases in home values during that time. In most parts of the state, values have returned to pre-recession levels.

So far, 2016 has been a good year for Michigan’s housing market. Home values continue to rise. Consider this: In November 2014, the average sale price in the state was $153,000. A year later, in November 2015, it had increased to $164,000. Homes are selling quickly too. In September 2015, homes for sale in the state stayed on the market for an average of 80 days. During the housing crisis, the average was closer to 100 or more days, and it even spiked to six months or longer at some points.

What are the Top Predictions for Michigan Housing Market in 2016?

So, how will Michigan’s real estate market fare in the months ahead? Here are a few predictions based on currently available information and existing trends:

Housing Shortage Continues – Markets around the state have faced serious housing shortages, and it appears this will continue to be the case for most of the year. However, improved consumer confidence and continuing rising home values might help a little. New construction is expected to pick up a bit too. In popular markets, however, sellers will likely receive multiple offers, and buyers will have to act quickly.
Home Prices Continue to Rise – Home values in Michigan will keep rising, but the rate will be slower. The National Association of Realtors predicts that home values will increase by 4% to 5% through 2016.
Home Sales will Increase Slightly – Due to demand from buyers, home sales will likely increase this year, and the average number of days on market will probably dip.
More First-Time Home Buyers – As rent continues to skyrocket in most parts of the state–and interest rates likely hold steady–more first-time home buyers will enter the market in 2016. There still won’t be quite as many as usual, however.
Mortgage Rates Remain Low – All signs point to Michigan mortgage rates remaining quite low throughout the year. The National Association of Realtors has already stated that they will hold fairly steady but that minor, gradual increases will probably occur.

If you live in Michigan and are thinking about buying a home, 2016 may be the year to make your move. That’s especially true if Michigan mortgage rates continue to hover near historic lows.