Best Mortgage Rates this Summer?
Only a few months ago, economists were pretty much united in their mortgage loan rate forecasts. There would, they thought, be a slow but steady rise throughout 2010, topping six percent or even higher by the end of December.
So some will have been a little surprised to read in the May 24, 2010 Wall Street Journal that the expected trend has been reversed, and that some analysts are now predicting that the average 30-year, fixed-rate mortgage (FRM) could cost as little as 4.5% this summer.
Looking back through Freddie Mac's archive, anything close to that would represent the best mortgage rates since the organization began compiling records 29 years ago.
Mortgages--Every Silver Lining Has a Cloud
Unfortunately, that glimmer of light did little to relieve the unremitting gloom that some think surrounds the housing market. For example, the Washington Post reported May 26, 2010 that home prices fell 0.5% between February and March, and were only 2.3% higher than they were during the same period last year.
And, the day before the Post report, Barron's ran a feature under the headline "Cheap Mortgages: No Boost for Housing" that said: "The drop in interest rates reflects deflation, not an opportunity."
Realtors More Cheerful
The National Association of Realtors struck a more cheerful note when it unveiled its most recent survey of existing home sales. It found that they had jumped 7.6% in April to a seasonally-adjusted annual rate of 5.77 million units. It's true that much of that increase is likely to have been a result of buyers beating the deadline for the ending of the federal home buyer tax credit scheme, but Lawrence Yun, who is the NAR's chief economist, put a positive spin on the figures:
The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market. For people who were on the sidelines, there's been a return of buyer confidence with stabilizing home prices, an improving economy, and mortgage interest rates that remain historically low.
Home Refinance Set to Rise?
One very likely result of a further drop in today's mortgage rates would be a resurgence in home refinances. Refinancings are always very sensitive to rate changes, and a dip as low as 4.5% would be almost certain to tempt many--including some who recently refinanced at more than five percent--to revisit their mortgages.
Mortgage Quotes Now
If you're thinking of buying a home or refinancing, you can begin the process now. Get competitive mortgage quotes here.