Current mortgage rates are near a two-year best, putting millions of U.S. homeowners "in the money" to do a home refinance to lower rates, and adding more than 10% to a buyer's purchasing power as compared to last year.
But can low interest rates last? Consumers say no.
According to a monthly survey conducted by government-backed Fannie Mae, 94% of U.S. consumers think mortgage rates have stopped dropping.
Rising rates would close the refinance window for many U.S. homeowners and increasing the cost of homeownership for today's active buyers. Today, mortgage lenders quote rates and APRs in the 3s.
By 2016, consumers say, interest rates will be worse.
Today's mortgage rates are near their lowest levels of the year, approaching lows not seen since May 2013.
The most recent Freddie Mac survey of more than 100 banks nationwide puts the 30-year conventional fixed-rate loan at 3.75%. Since the start of last year, interest rates are lower by 78 basis points (0.78%).
Refinance volume has increased as interest rates have dropped. There were more home refinances of conventional loans last quarter than during any time in 2014.
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.
It's easier to get approved for a streamlined refinance when mortgage rates are low and now, consumers believe interest rates have bottomed.
According to 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 6% say rates will drop.
However, consumers are typically wrong about this sort of stuff.
Last year, for example, four percent said mortgage rates would drop over the next 12 months. Those 40 of the 1,000 surveyed were the only ones to get it right. And, for all the talk that "mortgage rates can't stay low forever", they've certainly managed to stay low for a long time.
The long-term 30-year mortgage rate average is near 8.25%.
The February Fannie Mae survey also shows U.S. consumers bullish on housing with 67% of those surveyed saying now is "a good time to buy a home".
It's not tough to see why.
As compared to two years ago, in many U.S. cities, home values are up more than 10 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 thirty percent from lows.
Condos in these markets have fared even better and there's hardly a housing metric which doesn't show solid annual growth.
With mortgage rates near 22-month bests, many 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 loans to help them with financing, including the 100% USDA mortgage, the no-money-down VA loan.
There's also the 3.5%-down FHA loan and 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. 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.
On average, game players have a 65% success rate. The top player so far, Joe Caltabiano of Guaranteed Rate, has an astonishing 93% win rate.
Sign up for The Mortgage Rate Game now.
Current mortgage rates are near their lowest levels since May 2013. Lenders now quote rates in the 3s and APRs are similarly low.
Get a complimentary 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.
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2015 Conforming & FHA Loan Limits
Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.