Mortgage Rate Predictions For The Next 7 Days (March 29, 2012)
Want a mortgage rate prediction for the next week? I participate in the weekly Bankrate.com Mortgage Rate Trend Index survey. This week's results may have your answers.
Conforming Mortgages Rates Only
First, the fine print. These mortgage rates predictions are for Fannie Mae- and Freddie Mac-backed mortgages in places like Montgomery County, Maryland; Palo Alto, California; and wherever else conforming and "high-cost" mortgages are available only.
Loan types specifically excluded include refinance rates on FHA Streamline Refinances because FHA Streamline Refis are priced differently from a conventional mortgage; VA mortgages and IRRRLs; USDA 100% financing loans; and jumbo mortgages.
Furthermore, unique loan types, like mortgages for investors with more than 4 properties financed, are excluded.
You can click here to get a mortgage rate quote anytime.
Breaking Down The Predictions
Here's this week's mortgage rate outlook:
- 29% think mortgage rates will increase
- 42% think mortgage rates will decrease
- 29% think mortgage rates will won't change
I expect mortgage rates to decrease.
My advice not be appropriate for your individual situation and I'm not always right.
What I told Bankrate.com : "The Fed is using rhetoric to bring mortgage rates down."
Mortgage Rates Retreat Towards 4 Percent
In October 2011, mortgage rates moved to the lowest levels of a lifetime, then stayed there. Homeowners lucky enough to refinance between then and February 2012 were greeted by exceptional pricing and rapid mortgage underwriting.
If there was ever a Golden Age of Mortgage Refinancing, this was it.
The 30-year fixed rate mortgage went sub-4 percent for homeowners willing to pay 0.8 discount points plus a full set of closing costs, and the 15-year fixed rate mortgage was similarly low. Mortgage rates had done nothing but fall for 5 months straight.
And then the Federal Reserve met.
Evidence of an economic rebound had been mounting for months, led by gains in the housing market and the addition of more than 1 million jobs to the U.S. economy. Then, March 13, in its post-meeting press release, the Federal Reserve said to expect "moderate growth" over the next few quarters, an upgrade from just 6 weeks earlier when the Fed said to expect "modest growth".
It was a small tweak, but it was enough to catch Wall Street's attention.
Mortgage bond markets promptly sold-off, sending mortgage rates soaring. Wall Street had expected the Federal Reserve to introduce new economic stimulus at some point in 2012. The Fed's comments changed those expectations; as if the economy was doing just fine without such "a push".
The Fed Puts QE3 Back In Play
There were a lot of investors betting on low rates forever. The Fed changed those expectations March 13 -- on purpose or not on purpose. Regardless, the Fed is now using rhetoric to bring mortgage rates back down.
This week, Fed Chairman Ben Bernanke was on a speaking tour, of sorts, during which he repeatedly discussed the U.S. economy's fragile state and persistently weak labor market conditions. Labor conditions, of course, that can only be nurtured by a low-rate environment.
In making these remarks, Chairman Bernanke put QE3 back on the table, reversing the direction of the mortgage market.
Mortgage rates are dropping, and will continue to drop until they either (1) reach the lows of earlier this year, or (2) are changed by some direct Fed action.
It's A Good Time To Shop For Mortgage Rates
Mortgage rates should drop this week, but don't try to wait it out. Rates remain low and -- in a historical context -- are actually quite amazing.
Today, Freddie Mac's weekly survey says the average 30-year fixed rate mortgage can be had for 3.99% with 0.7 discount points. That's low. Especially in contrast to 30 years ago when the 30-year fixed rate mortgage rate topped 18% and still required 2.3 discount points to be paid at closing.
When we say "rates are historically low", this is what we mean. See what rate you can get. Get a free, no-obligation mortgage rate quote online.