September 29th, 2010

New Two-Month Forecast now available on HSH.com



On a bi-monthly basis, HSH.com releases their Two-Month Forecast for Mortgage Rates. In each forecast, we review our previous prediction — evaluating the circumstances that caused rates to do what they did — and we examine current factors and conditions in order to forecast mortgage rates over the next nine weeks or so.

Each two-month forecast is made up of four parts: the preface, a recap of our previous prediction, the forecast discussion and finally the forecast itself. We’ll do a short summary of each section here on the blog, but be sure to visit HSH.com to read our entire forecast.


The National Bureau of Economic Research (NBER) declared that the longest recession since the Great Depression came to an end well over a year ago. That being said, it sure doesn’t feel like it. Technically a recession or not, pessimism over the economy is alive and well. Home sales are floating along near-record lows, job growth remains non-existent and all of the money Washington has spent to cure these problems has resulted in little more than a growing deficit.


For the last forecast period, we expected that the slow-growth, low-rate environment would continue. Conditions cooperated nicely with our expectations, and compared to other periods this year, mortgage interest rates moved in very narrow ranges. For the period, we expected HSH’s Fixed-Rate Mortgage Indicator (FRMI) to wander between 4.83 percent and 5.15 percent, but the cooling in the economy produced lower bounds and a narrower gap to boot, with a low of 4.75 percent and a high of 4.92 percent for the period. For hybrid 5/1 ARMs, perhaps the most viable alternative to a 30-year FRM, we foresaw a 3.72 percent to 4.15 percent range, and got a 3.72 percent to 3.92 percent one. For all-important conforming 30-year FRMs, we called for a 4.50 percent to 4.88 percent gap, and got an actual 4.49 percent to 4.65 percent one. All rates moved to new historic lows and generally trended downward throughout the period.

Forecast Discussion

One of the biggest things missing from the markets today is confidence. The lack of confidence spans from consumers to business executives:

If a lack of confidence is the key issue facing the economy, how might it best be fixed? In a word, leadership. Clarity of thought and purpose lend to an air of confidence, as does acknowledgment of the stark realities of the present circumstances relative to their potential. Removing uncertainty matters a lot; doing so engenders a sense of trust in policies and systems which are needed to get us moving again in the right direction.

Confidence and optimism are bred through the expression of clear, practical ideas to get us there, and these need to come from our elected representatives. Confidence can be built by admitting failures and fallibilities, but expressing a willingness to change to better meet the challenges which face us.

The folks in power need to do a much better job in this regard.


The next time we check in with a new two-month forecast, we’ll have just finished Thanksgiving dinner.

Where exactly will rates move over the next two months? CLICK HERE to continue reading HSH.com’s latest Two-Month Forecast for Mortgage Rates.

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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.

Our bloggers:

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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