Slow Recovery Ahead for Six-Month Low in Mortgage Rates
Back in January, Freddie Mac’s Chief Economist Frank Nothaft projected mortgage loan rates to reach 5.1% by the end of 2014. However, as we approach the middle of the year, the market is not quite living up to expectations.
Mortgage interest rates are currently at their lowest level in six months, with rates on a 30-year fixed-rate mortgage averaging 4.21% in the first week of May. This represents a drop from the prior week’s 4.29%. Further, Nothaft is not expecting rates to recover quickly; during an economic forecast event at the US Chamber of Commerce, he projected a very slow and gradual rise throughout the rest of the year. With these new trends in mind, January’s forecast is being revised to a rate of 4.65% by the end of the year.
Hopefully, this new trend will translate to a boost in the housing market. Since mortgage interest rates jumped by over a full percentage point in 2013, home sales took a hit during the past fall and winter. Nothaft is expecting home sales to speed up and match last year’s numbers by the close of 2014, with new construction potentially beating out 2013.
