Wait, Mortgage Rates May Fall Even More

April 8, 2009 No Comments »

low rates

Sure, mortgage rates are low now, but a couple of analysts see further downward movement this year.

Bank of America-Merrill Lynch economists Gary Bigg and David A. Rosenberg said in a research note to clients that efforts to ease monetary policy, along with a generally weak economy, will send mortgage rates lower.

They expect interest rates on the ever-popular 30-year fixed to fall from its current, record low level of 4.85 percent, to 4.20 percent by year-end.

Additionally, they believe home sales will improve in the second half of the year despite high unemployment numbers, though a steady influx of distressed properties will hamper an outright recovery.

Over the past couple weeks, interest rates have set record low after record low, but recent movement has been negligible at best, suggesting a bottom to the historical interest rate slide.

And in late March, Freddie Mac interim CEO John A. Koskinen suggested that interest rates were as good as they were gonna get, though that could just be a ploy to get homeowners refinancing and prospective homebuyers biting.

I still think these low interest rates are a bad idea because they skew affordability and prop up home values that remain inflated, despite huge price declines.

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