Mortgage Rates Near 5% — Four Things to Knowby Tim Manni
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.”