Freddie Mac: Rates Hold Steady for 4 Weeks, But Likely to Rise Soon
Feb 28th, 2017 @ 10:41 AM by Amber Nelson
Long-term mortgage rates have been in a holding pattern for last four consecutive weeks, but there is very little chance they will linger near 4 percent for long, according to a recent forecast from mortgage giant Freddie Mac.
During the week ended February 23, 2017, the average rate on a 30-year fixed rate mortgage (FRM) inched up to 4.16 percent with an average 0.5 point, up from 4.15 percent the week before. The week previous to that it averaged 4.17 percent and 4.19 percent the week before that. Freddie Mac’s chief economist Sean Becketti said the relatively small movement in long-term mortgage rates is due to “continued uncertainty” in the markets about the direction of the Trump presidency and his economic policies.
One year ago the average rate was just 3.62 percent, a level not bound to return for the foreseeable future. The Freddie Mac February Outlook predicts higher inflation over the next few months and years and although the increases are not expected to be dramatic, they will mean a steady rise in mortgage rates.
“Which course inflation takes over the next year will have important implications for housing and mortgage markets. On balance, the risks to higher inflation outweigh lower inflation, but in our estimation, most of the reflationary factors have already been baked into current interest rates and inflation is likely to increase only modestly over the next two years,” Becketti commented.
“With the housing market on the verge of the spring home buying season, this is good news in an environment where historically low mortgage rates will help offset the pace of house price growth and lack of for-sale inventory in many markets.”
Even though inflation and rates make rise gently, the days of 3 percent mortgages are likely to be a thing of the past.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.