Current mortgage rates are nearing a two-year best, puttingÂ millions of U.S. homeowners "in the money" to refinance to lower rates and payments and adding more than 10% to a buyer's purchasing power as compared to last year.
But can low interest rates last?Â Consumers say no.
According to a monthly survey conducted by government-backed Fannie Mae, 93% of U.S. consumers thinkÂ mortgage rates have stopped dropping. Rising rates would close the refinance window for many U.S. homeowners while increasing the cost of homeownership for todays active buyers
Today,Â mortgage lenders quote rates and APRs in the 3s. By 2016, consumers say, prices will be worse.
Today'sÂ mortgage rates are at lowest levels of the year, approaching lows not seen since May 2013 .
Freddie Mac's weekly survey of more than 100 banks nationwide puts the 30-year conventional fixed-rate loan at 3.66% --Â nearlyÂ 100 basis points (1.00%) below the rates of last January.
Conventional ratesÂ fell through 34 weeks last year and have started 2015 on a similar, downward trend. Rates improved one-quarter percentage point to start the year.
Furthermore, FHA mortgage rates have been, on average, 0.25 percentage points lower than comparable Fannie Mae- and Freddie Mac-backed loans; VA and USDA mortgage rates have been 0.375 percentage points lower.
And, now, consumers believe interest rates have bottomed.
According toÂ Fannie Mae's monthly National Housing Survey, a survey for which the agency speaks with 1,000 households mixed between homeowners and renters, mortgage rate sentiment is decidedly negative.
Fannie Mae asks survey participants: "Do you expect mortgage rates to go up, go down, or stay the same in the next 12 months?" Only 7% say rates will drop.Â
Consumers are typically wrong, however.
Last year, for example, only fourÂ percent said mortgage rates would drop over the next 12 months. These 40 consumers, it turned out, out of the one thousand surveyed, were the only ones who got it right.
Everyone else got it wrong and, for all the talk that "mortgage rates can't stay low forever", pricing has done exactly that.Â
The DecemberÂ Fannie Mae survey shows U.S. consumers bullish on housing with 64% of those surveyed sayingÂ now is "a good time to buy a home".
It's not tough to seeÂ why.Â
As compared to two years ago, in many U.S. cities, home values are up more than 10Â percentage points and the housing market's steady recovery has been a national news story since late-2012.
The hardest-hit cities of last decade's downturn have led this decade's rebound.
Phoenix, Arizona; San Francisco, California; and Los Angeles are three notable markets in which single-family home values have climbed by more than thirtyÂ percent from lows.
Condos in these marketsÂ have fared even better and there's hardly a housing metric which doesn'tÂ show solid annual growth.
With mortgage ratesÂ near 24-month bests, manyÂ U.S. lenders now quote rates in the mid- to low-3s. Purchasing power is stretched and home affordability is high.
Plus, today's active buyers have access to a multitude of low- and no-downpayment mortgage loansÂ to help them with financing, includingÂ the 100% USDA mortgage, the no-money-down VA loan.
There's also the 3.5%-down FHA loan andÂ Conventional 97 program from Fannie Mae which requires a downpayment of just three percent.
Furthermore, more purchase home loans are getting approved than during any period since 2011, according to Ellie Mae. Buyers not only have access to low-downpayment programs, but they're having an easier time getting to closing.
Based on Fannie Mae data, U.S. consumers do a terrible job of predicting the future of mortgage interest rates. The constant belief that rates "can't possibly go lower" has been proved false over and again since 2009.
Can industry insiders do any better, though?
The Mortgage Reports hosts a weekly mortgage rate prediction game called The Mortgage Rate Game.
Each week, players forecast whether mortgage rates will rise, fall, or remain unchanged.Â Their forecasts can be helpful to home buyers wanting to know in what mortgage rates will go in the future. They're also helpful to homeowners wondering whether now is a good time to refinance.
The Mortgage Rate Game is free to play and everyone's welcome. Our top players tend to be mortgage industry insiders, but real estate agents and non-industry consumers have performed well, too.
Sign up for The Mortgage Rate GameÂ now.
CurrentÂ mortgage rates are near their lowest levels since May 2013. Lenders now quote rates in the 3s and APRs are similarly low.Â
Get a complimentaryÂ mortgage rate quote now. Rates are available online at no cost, with no social security number required to get started, and with no obligation to proceed.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Sarah M. Office Manager
The Mortgage Reports has been an invaluable resource to me -- it helped me to pick the sweet spot to refinance. Thanks!
The Mortgage Reports is very informative and very helpful. Its daily updates are among the first emails I open each morning.
I enjoy reading The Mortgage Reports. The articles are informative with lots of good stats and trends.
2015 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)