Forecasts for Higher Mortgage Rates Were Wrong

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Mortgage rates continue their downward spiral into 2015, defying predictions of higher rates. Mortgage rates moving lower in 2014 wasn't supposed to happen. Experts in the industry, including the Mortgage Bankers Association (MBA), forecast mortgage rates to be much higher than current levels.

In March of 2014, the MBA's Mortgage Finance Forecast had 30 year mortgage rates hitting 5.00 percent by the fourth quarter of 2015 and 5.10 percent in the first quarter of 2015. Current 30 year mortgage rates are averaging 3.80 percent and the lowest 30 year rates quoted today are at 3.50 percent.
Loan Type
Purchase    Refinance
Location
State/City    Zip Code
Loan Amt Points FICO % Down
  
$
30 yr fixed refi in 23223, All points, Credit score: 740+     Sort by:
Lender
APR
Rate
Cost & Fees
Notes
 
30 yr fixed mtg refi Mortgage Loan from Bank of America
Bank of America
300000
Refinance
4.321
4.250
USD
Bank of America
4.321%
3/20/2019
4.250%
at 0.415 pts
60 day lock rate
Est payment: $1,475.82
Fees in APR: $1,289
 
 
30 yr fixed mtg refi Mortgage Loan from TD Bank, NA
TD Bank, NA
300000
Refinance
4.027
4.000
USD
TD Bank, NA
4.027%
3/22/2019
4.000%
at 0.000 pts
45 day lock rate
Est payment: $1,432.25
Fees in APR: $982
 
 
30 yr fixed mtg refi Mortgage Loan from Apple Federal Credit Union
Apple Federal Credit Union
300000
Refinance
4.345
4.250
USD
Apple Federal Credit Union
4.345%
3/20/2019
4.250%
at 1.000 pts
60 day lock rate
Est payment: $1,475.82
Fees in APR: $352
 
 
30 yr fixed mtg refi Mortgage Loan from Fulton Bank, NA
Fulton Bank, NA
300000
Refinance
4.550
4.500
USD
Fulton Bank, NA
4.550%
3/19/2019
4.500%
at 0.250 pts
60 day lock rate
Est payment: $1,520.06
Fees in APR: $1,007
 
 
30 yr fixed mtg refi Mortgage Loan from Virginia Credit Union
Virginia Credit Union
300000
Refinance
4.432
4.375
USD
Virginia Credit Union
4.432%
3/19/2019
4.375%
at 0.125 pts
45 day lock rate
Est payment: $1,497.86
Fees in APR: $1,650
 
 
30 yr fixed mtg refi Mortgage Loan from Citizens Bank, NA
Citizens Bank, NA
300000
Refinance
4.321
4.250
USD
Citizens Bank, NA
4.321%
3/22/2019
4.250%
at 0.375 pts
60 day lock rate
Est payment: $1,475.82
Fees in APR: $1,408
 
 
30 yr fixed mtg refi Mortgage Loan from Santander Bank, N.A.
Santander Bank, N.A.
300000
Refinance
4.432
4.375
USD
Santander Bank, N.A.
4.432%
3/22/2019
4.375%
at 0.000 pts
60 day lock rate
Est payment: $1,497.86
Fees in APR: $2,004
 
 
30 yr fixed mtg refi Mortgage Loan from LincolnWay Community Bank
LincolnWay Community Bank
300000
Refinance
4.280
4.250
USD
LincolnWay Community Bank
4.280%
3/19/2019
4.250%
at 0.000 pts
30 day lock rate
Est payment: $1,475.82
Fees in APR: $1,085
 
 
30 yr fixed mtg refi Mortgage Loan from State Department Federal Credit Union
State Department Federal Credit Union
300000
Refinance
4.557
4.500
USD
State Department Federal Credit Union
4.557%
3/18/2019
4.500%
at 0.000 pts
60 day lock rate
Est payment: $1,520.06
Fees in APR: $2,000
 
 
30 yr fixed mtg refi Mortgage Loan from Northwest Federal Credit Union
Northwest Federal Credit Union
300000
Refinance
4.326
4.250
USD
Northwest Federal Credit Union
4.326%
3/20/2019
4.250%
at 0.875 pts
45 day lock rate
Est payment: $1,475.82
Fees in APR: $79
 
 
30 yr fixed mtg refi Mortgage Loan from Bank of Oak Ridge
Bank of Oak Ridge
300000
Refinance
4.225
4.180
USD
Bank of Oak Ridge
4.225%
3/21/2019
4.180%
at 0.250 pts
60 day lock rate
Est payment: $1,463.55
Fees in APR: $853
 
 
30 yr fixed mtg refi Mortgage Loan from Raymond James Bank, NA
Raymond James Bank, NA
300000
Refinance
4.537
4.500
USD
Raymond James Bank, NA
4.537%
3/19/2019
4.500%
at 0.000 pts
45 day lock rate
Est payment: $1,520.06
Fees in APR: $1,299
 
 

Mortage Data Provided by Bankrate.com Many lenders have different rates on their own Websites than those posted on Bankrate.com. In order to get the Bankrate.com rate, please identify yourself as a Bankrate.com customer. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the lender you choose, please click here.

The rates above were collected by Bankrate.com on the dates specified. Rates are subject to change without notice and may vary from branch to branch. Rate/APR and terms may vary based on the creditworthiness of the individual and the extent to which the loan differs from the one used for Bankrate.com quotes. For criteria used in surveys of rates above, click here. These quotes are from banks, thrifts, and brokers, some of whom have paid for a link to their own Web site, where you can find additional information.






The most recent MBA forecast for rates is their December Mortgage Finance Report. Forecasts were for 30 year rates to be at 4.40 percent in the first quarter of 2015 and hit 5.00 percent in the third quarter. These forecasts will probably have to be revised down again since rates have moved lower since December.

Lenders peg mortgage rates to 10 year bond yields and 10 year yields are almost at record lows. 10 year yields closed on Friday at 1.81 percent, only 14 basis points from the record low of 1.66 percent set in May 2013. You can view the history of bond yields on the U.S. Department of the U.S. Treasury website: U.S. Treasury Yields.

Forecasts on mortgage rates have been wrong because forecasts on bond yields have been wrong. When the Federal Reserve started winding down their purchases of long term bonds and mortgage backed securities, interest rates were supposed to move higher.

The Federal Reserve stopped their purchases in October 2014 and since that time bond yields have fallen considerably. At the end of October, 10 year bond yields closed at 2.35 percent, 54 basis points higher than the current rate. That is almost a 23 percent drop.

Average 30 year mortgage rates have fallen from 3.98 percent to 3.80 percent, 18 basis points or almost a 5 percent drop. Average mortgage rates haven't dropped as much as bond yields because lenders have been slow to lower rates. This would suggest 30 year rates on average could fall even further, regardless of whether or not bond yields fall further.

Once the Federal Reserve increases rates, banks and other financial institutions will as well. Mortgage rates, other loan rates, CD rates and other deposit rates will all move higher.
 
Author: Brian McKay
January 22nd, 2015