March 16th, 2015 9:11 AM by Jackie A. Graves, President
The Mortgage Bankers Association announced
in late February that housing is poised for stronger growth in 2015. Yet
mortgage interest rates remain low. Should you lock in a rate now or see what
depends on your tolerance for risk. Despite a positive outlook for the economy,
researchers say that worries over global economic weakness continue to attract
investors to US Treasuries.
investments, mortgages compete with treasury bonds. According to researchers, a
30-year fixed rate mortgage has a lifespan of about seven years, making the
10-year Treasury bond the closest comparable investment. That's why mortgage
rates tend to fall when the treasury rate falls, and rise when the rate rises.
now, the US economy is continuing on a path of steady growth. In 2014 payrolls
grew at the highest rate since 1999. Low oil costs have lowered the import
costs of goods and increased cash flow for consumers, which has helped drive
economic growth for the past few quarters. All this good news should result in
higher interest rates, but the MBA says global economic weakness and political
unrest are putting downward pressure on interest rates.
oil prices are predicted to remain low for a long time, and the U.S. dollar is
getting stronger, the MBA says consumer price inflation will be held to 1.4
percent for 2015. That's a good thing because inflation is the enemy of
mortgage interest rates. If inflation picks up, the government will raise rates
on overnight borrowing rates to banks. The result will be higher lending rates
its latest weekly survey, Freddie
Mac showed average fixed mortgage rates moved higher amid solid
housing data on new home sales and home price appreciation. That said, fixed
rates are still near lows not seen since May 2013.
benchmark 30-year fixed-rate mortgage (FRM) averaged 3.80 percent with an
average 0.6 point for the week. Compare that to a year ago when the average
30-year fixed rate mortgage was 4.37 percent.
you lock in? Heck, yeah.
by Blanche Evans | To view the original guide click here