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January 17th, 2009

Mortgage Rates Near 5% — Four Things to Know

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Luke Mullins of U.S. News & World Report has documented four causes and effects of mortgage rates dropping to near 5%.

What factors have allowed mortgage rates to fall to levels unseen in decades? “Uncle Sam is behind the dive,” writes Mullins. Decreased inflation, lower yields on 10-year Treasuries, and, most importantly, the government’s commitment to purchase $600 billion in Fannie and Freddie debt and mortgage-backed securities, have all influenced the decline.

How long can we expect this current mortgage market to last? “There is no reason to think that rates are going to go up so substantially so as to erode the marketplace,” says HSH’s Keith Gumbinger. Mullins expects that rates “should remain attractive for the rest of the year.”

Why haven’t low rates been enough to spur a boost in purchases? Despite the low rates and eagerness of potential borrowers, “the conditions of the labor market and the broader economy,” has continued to stifle sales, said economist Richard Moody.

Click here to continue reading Luke Mullins “4 Things You Need to Know.”

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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