Mortgage Rates Are Trending Lower
Over the last two months, the Federal save Bank and Ben Bernanke has done everything in their strength to push mortgage rates lower. The United States government is planning on purchasing over $1 trillion in mortgage backed securities and long term treasuries. No one really knows if this is going to stimulate the economy and get the United States out of this horrible recession but one thing it is guaranteed to do is lower mortgage rates.
Mortgage rates have been under 5% for a few weeks now and it looks like they will not already retrace back to that number. Last week many analysts expected we would see mortgage rates get closer to 5% as we need to retrace back to that psychological level. That did not happen as mortgage rates dropped all the way to 4.82%. It is likely that we are going to continue to see a drop in average mortgage rates as the 5% obstacle has been broken and the government is pushing rates lower.
To try and forecast where rates will be in a year would be very difficult as that would be dependent on the overall economy. If we see the economy stabilize and start to get better, it is likely that the government will jump ship and stop buying all the mortgage backed securities. If the economy stays as it is now or worsens, mortgage rates could fall all the way to 4% or below. Ultimately, it is the overall economy that will be the best mortgage rate forecaster. Until we see some kind of recovery, interest rates will continue to fall to historic lows.