Mortgage Rates – Will Rates Head Higher in 2011?
Mortgage rates are low and have been low for over a year now. The current national average 30 year mortgage rate is 4.77% as reported by MonitorBankRates.com. The Mortgage Bankers Association is forecasting 30 year mortgage rates to hit 5.6% by the fourth quarter of 2011 and 6.0% by the end of 2.012.
Recent economic news suggests that 30 year rates might not even hit 5.6% by the fourth quarter of this year. First quarter advance GDP numbers came in at 1.8%, which is a slower rate of growth than the fourth quarter of last year.
In the Federal Open Market Committee (FOMC) recent statement on economic policy, the Fed said the economy is gradually improving but the housing market is still depressed. The Fed also said longer term inflation expectations are stable so inflation still isn't a concern.
The Fed Funds rate was left unchanged at zero percent to one quarter percent and they expect to keep the rate at an exceptionally low levels for an extended period of time.
A slow expanding economy, low inflation and high unemployment will all keep interest rates and mortgage rates low in 2011 and possibly into 2012. Even if the economy picks up steam and inflation becomes a concern 30 year conforming rates won't hit 5.50 percent this year. A more likely scenario is we will see 30 year rates stay under 5.00 percent for the rest of 2011.
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