Mortgage rates are expected to rise in 2019. If you’re shopping for a home, it could get tougher

For the last few weeks, the economy has been pretty confusing.

The U. S. stock market took a major nosedive last month, finishing as the worst December since 1931, during the Great Depression. On Christmas Eve, the stock markets suffered their steepest decline. Then, just two days later, stocks had amiraculous comeback, with the Dow Jones Industrial Average soaring more than 1,000 points in a single day for the first time.

Meanwhile, things have been equally unclear regarding jobs and wages. The unemployment rate is at a 49- year low of 3.7 percent, yet more than 60 percent of Americans recently said they did not receive a pay raise at their current job or get a better- paying job in the last 12 months. That all comes as job cre- ation has slowed, and optimism among manufacturers — a critical voter base for President Donald Trump — has slipped. Ask Trump about the jobs numbers, however, and he will tell you they are doing fine. ( And on Wednesday, he said last month’s stock- market downturn was caused by a “little glitch.”)

So you’re probably wondering what’s happening with the housing market’s mortgage rates — the one thing that consistently affects how much you pay for a home. In October, the 30- year fixed mortgage rate jumped past 5 percent for the first time since 2011, creating considerable speculation among market observers that mortgage rates would only go up from there. Then, in December, the rates ticked back down again, hovering at 4.5 percent around Christmas.

It’s difficult to predict where mortgage rates — or the economy — will go, with forecasts and realities changing month- to- month, or dayto- day.

Still, most economists expect that mortgage rates will continue to rise throughout the year. The housing website and research company Zillow projects that by the end of 2019, rates will reach 5.8 percent. The National Association of Realtors’ vice president of research has said 5.3 percent. Freddie Mac, meanwhile, has a more conservative estimate, predicting that the 30- year fixed rate will average 5.1 percent in 2019.

But what does that mean for the typical home buyer, who likely doesn’t monitor mortgage rates consistently?

According to one of the latest Zillow reports, rising rates can actually mean a lot.

In a December analysis that studied housing affordability in markets across the nation, Zillow found that mortgage rates can affect buyers’ budgets more than they might think. The higher that mortgage rates rise, Zillow found, the less a buyer can spend on a house and still keep payments affordable.

Consider, for example, a buyer who makes the current U. S. median household income of $ 61,240 and wants to spend 30 percent of that salary each month on a mortgage payment. In January 2018, when mortgage rates were 4.15 percent, the buyer could have bought a $ 393,700 home, according to Zillow’s research. Now, with rates hovering around 4.63 percent, a buyer who wanted the same monthly payment could instead afford a $ 372,000 home — $ 21,700 less.

If mortgage rates were to rise as high as 6 percent, Zillow found, a buyer would instead have to shop for a $ 319,200 house to maintain the same affordability, a nearly 19 percent reduction in purchase price from the 4.15 percent mortgage rate of this time last year.

“The interest rates are a really, really big deal,” said Skylar Olsen, director of economic research and outreach at Zillow. “A small change could impact your monthly mortgage payment quite a bit.”

Rising mortgage rates also could have ripple effects across the entire market.

First- time or current buyers, intimidated by the possibility of taking on more expensive debt, could decide to delay or quit their housing search altogether, Olsen said. Homeowners would, as a result, stay in their current properties, reducing the number of available homes on the market. Generally, a housing market is considered healthy when homeowners are trading up, thereby freeing up housing for different subsets of buyers. When current starter- home owners, for example, do not move on to larger homes, it’s harder for firsttime buyers to get into the market.