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April 6th, 2011

“Fantastic” mortgage rates expected through the spring



Whats NextOnly if locking in low mortgage rates was the only thing borrowers had to worry about while en route to purchasing their homes. Reality is, securing low mortgage rates is only one facet of the homebuying process. Borrowers have a lot of other things to worry about these days including stellar credit scores, large down payments, smaller debt-to-income ratios, equity stakes, and more.

That said, the truth is, if you can qualify for mortgage financing, mortgage rates are expected to remain “fantastic” through the spring. The “bad” news: They’re not expected to remain at unprecedented levels (buyers will have to settle for fantastic).

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Every nine weeks or so, HSH.com publishes a “Two-month forecast for mortgage rates.” The forecast reexamines the market’s behavior over the last two months and analyzes current market conditions to develop a forecast that provides specific numerical ranges of where we think mortgage rates will wander moving forward.

Turns out, we were pretty spot on in our last “Two-month forecast for mortgage rates“:

In early February, we looked across the economic spectrum and made our usual speculations for mortgage interest rates. At that time, we expected that the overall average for 30-year fixed-rate mortgages (as tracked by HSH’s FRMI) would wander in a range from 5% to as much as 5.35%. During the nine-week period, we actually saw a 5.08% to 5.33% range, and forecasts rarely get much more accurate than that. For the overall Hybrid 5/1 ARM, we foresaw a 3.75% to 4.05% set of bookends, and were presented with a 3.70% to 3.88% one instead, still a pretty reasonable call. For the all-important Conforming 30-year FRM, we specified a 4.83% to 5.18% range, and solidly hit those marks with a 4.86% to 5.13% gap. All in all, a nice recovery for us after a rough December-to-February forecast.

Current conditions expected to keep rates at “fantastic” levels

At least as the next two months are concerned, current economic conditions are expected to keep mortgage rates grounded for the most part:

With all the challenges to the recovery still so evident, it would be hard to expect interest rates to get a whole lot of upward traction. That said, we expect that the market’s focus will shift away from the immediate crises to longer-term concerns again, and those do seem likely to return us to the path we were on before, one of potentially firmer interest rates as we move forward, if only mildly so.

Since interest rates are only one component of a successful homebuying transaction, even somewhat firmer rates shouldn’t derail or seriously deter home sales this spring (at least not any more than they already are). Expectations are that sales will continue to show signs of recovery after a fairly unfavorable winter, where both new and existing home sales slipped at season’s end.

You’ll have to check out our “Two-month forecast for mortgage rates” to see our exact predictions for mortgage rates over the next nine weeks.

One Response to ““Fantastic” mortgage rates expected through the spring”

  1. Top 10 Real Estate Blogs and News Sites: Technorati Tracks All « the LIME Magazine Says: April 6th, 2011 at 9:12 pm

    […] Recent: “Fantastic” mortgage rates expected through the spring Only if locking in low mortgage rates was the only thing borrowers had to worry about while en […]

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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