HousingWire – Trey Garrison
At the start of 2014, most industry experts and insiders agreed that based on the metrics they had at the time, interest rates and therefore mortgage rates would be going up in 2014.
And yet now five months into the year, mortgage rates continue to defy analyst expectations. At the start of the year, the Mortgage Bankers Association projected interest rates on the 10-year Treasury yield to go from 3% in the first quarter of 2014 to 3.3% by fourth quarter of 2014, averaging 3.2% for the year, and then creeping up to 3.5% by the last two quarters 2015, averaging 3.4% for 2015. MBA projected that 30-year fixed mortgage rates will go from 4.7% in the first quarter 2014 to 5.1% by the end of the year, and continuing a slow rise to 5.3% by the end of 2015.
Last week, Freddie Mac reported that mortgage rates dropped for the fourth time in five weeks, reaching an all-time low of 4.21% on a 30-year fixed, the lowest its been since November 2013. This is from the high point in January where rates flirted with 4.75%. This is a boon for homebuyers, but what does it mean for the industry, and where will interest rates go?
1) You Can’t Fake a Recovery
2) Lack of Inflation
3) The Taper Will Continue Until Morale Improves
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