With economic reports showing only tepid growth, mortgage interest rates are likely to stay near record lows for the foreseeable future, according to two recent rate forecasts.
Mortgage data company HSH.com reported that rates, closely tied to the health of the economy, will have little cause to move in the next two months.
“Unemployment claims have slipped back a little, hiring has picked up a tad, retail sales have improved and manufacturing has at least stabilized, albeit at a break-even, no-growth level, but still better than continued decline,” wrote Kieth T. Gumbinger, vice president of HSH.com in the forecast.
He tempered that news with,
“Gasoline prices have also firmed again, adding some additional drag, and there are expectations that this summer’s drought will have marked effect on food prices in the months ahead. Collectively, and with this as a backdrop, there’s not a lot of reason to expect a sharp acceleration in economic growth.”
The HSH forecast called for 30-year conforming fixed rate mortgages to carry average rates in the range of 3.60 percent and 3.92 percent for the next two months. That’s a slightly higher range than where rates were for the past two months, between an all-time record low of 3.49 percent and 3.71percent.
Mortgage finance company Fannie Mae also made interest rate predictions recently in its “Housing Forecast: August 2012″ release. Analysts at Fannie believe rates will fall to a general average of 3.60 percent on 30-year FRMs not just for the next few months but for the four quarters. Not until the third quarter of 2013, does Fannie have rates inching up to an average of 3.7 percent.
The issue seems to be simply a matter of economic stagnation. As the HSH forecast concluded,
“Just as we can’t find many reasons to be very optimistic about the period ahead, we can’t find many to adopt a more pessimistic outlook, either. There is some life in the economy, but also plenty of drag to keep it from moving forward much. Overall, we prefer to think that the upward force will prevail, but probably only by scratching and clawing to make progress.”