(LoanRateUpdate.com)
According to the latest economic forecast from mortgage giant Freddie Mac, mortgage rates are expected to hit considerably higher levels in 2011 that what was predicted just a month ago. Following the unexpected rise in mortgage rates from mid-November through the December, Freddie Mac expects the mortgage rate on 30 year fixed rate mortgages to hit 5.5 percent by the fourth quarter of 2011.
The lender also scaled back its projections for home sales and employment, even while predicting somewhat stronger economic growth overall.
Fixed rate 30 year mortgages had reached a historic low of 4.17 percent during the second week of November but by the end of the year stood at 4.86 percent. Freddie Mac had previously forecasted that mortgage rates would be 4.5 percent in the first quarter of this year (October through December) and subsequently has had to revise their 2011 forecast to compensate for the higher end of year mortgage interest rates.
Freddie Mac expects mortgage rates to remain within the same range that they are currently at for most of 2011 and then rise toward 5.5 percent by years end and average 5.8 percent in 2012.
So if you’re thinking about that refi…now may be a good time.
Despite the recent increase in interest rates, the 5.2 percent average predicted for 30-year loans throughout 2011 would still make it the third-lowest year on record, trailing only 2010 and 2009.
Freddie Mac has also scaled back their home sales predictions from last month, with home sales expected to peak at an annual rate of 5.70 million in the fourth quarter of 2011, and then fall back to only 5.56 million in all of 2012. The previous forecast called for sales to rise to an annual rate of 5.80 million by year’s end, and then hold that level for 2012.
Freddie Mac still expects 2010 to be a recovery year for home sales, with sales predicted to be the best in at least three years, with the annual total about 10 percent above the 4.56 million recorded in 2009
A middling jobs report in December led Freddie Mac to back off its unemployment projections slightly, although the lender still expects a decline in the unemployment rate this year to 9.1 percent from 9.4 percent currently.
Probably a good call considering the large jump in unemployment applications this week.
Tags: freddie mac, mortgage rates, home sales, unemployment rate, 30 year fixed rate mortgage, historic low rates, jobs, recovery year
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