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June 10th, 2011

We were right about mortgage rates remaining “fantastic”

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Whats NextSome two months ago when I blogged about our last Two-month forecast for mortgage rates, this is what I wrote:

…The truth is, if you can qualify for mortgage financing, mortgage rates are expected to remain “fantastic” through the spring. The “bad” news: They’re not expected to remain at unprecedented levels (buyers will have to settle for fantastic).

Two months later, current mortgage rates are “fantastic” to say the least.

Every nine weeks or so, HSH.com publishes a “Two-month forecast for mortgage rates.” The forecast reexamines the market’s behavior over the last two months and analyzes current market conditions to develop a forecast that provides specific numerical ranges of where we think mortgage rates will wander moving forward.

In our last forecast, we didn’t expect such a lack of economic growth. Mortgage rates never increased as much as we anticipated:

In our last forecast, we expected HSH’s FRMI to trend in a range between 5.05% and 5.40%; the economy failed to hold even meager growth levels during the period and we actually found a 4.81% to 5.18% one instead.

We forecast that the overall average for Hybrid 5/1 ARM would find 3.70% to 4.00% boundaries, but were presented with 3.42% to 3.85% ones instead.

Lastly, we believed that conforming 30-year FRMs would wander between 4.85% to 5.20% over the nine-week period, but a pair of 4.63% to 4.99% bookends were seen.

Clearly, we overestimated the economy’s potential during the period; this helped equities to move lower, and investors seeking safety and security plowed funds into bonds, hoping to lock in first quarter profits and escape a worsening Greek debt crisis.

Is the period of low rates finally over?

The end of the Fed’s QE2 program (by month’s end) is expected to have some influence over the future direction of mortgage rates. However, several highly-credited experts have conflicting views on whether QE2’s end will edge rates up or down.

Regardless of QE2’s influence on the mortgage market, economic and inflationary concerns are constants.

Are mortgage rates going to rise over the next two months?

You’ll have to read our “Two-month forecast for mortgage rates” to find out.

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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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