Will Mortgage Rates Ever Fall Again?

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2013-03-05_1119Mortgage rates have increased on the majority of calendar days this year, peaking at 3.56 percent, on average, nationwide for borrowers willing to pay closing costs and points. For borrowers wanting loans with zero closing costs, rates are closer to 4 percent.

Rates should continue to climb.

There has now been 28 consecutive months of U.S. job growth, a period during which 4.4 million net new jobs have been created. Furthermore, the number of first-time jobless claims has been steadily dropping — another sign of an improving jobs market. Jobs matter to the economy because, with more employed persons, more taxes are paid, more money is spent, and more hiring occurs. More working citizens can also correlate to higher demand for homes which can move the economy forward as well.

In response to the improving economy, the Federal Reserve has suggested a timetable against which it will begin to remove market stimulus. This, too, has contributed to rising mortgage rates.

However, the mortgage-backed bond market does remain precariously balanced. A single unexpected event could reverse market sentiment, which would lead mortgage rates lower once again. Events like these have occurred in April during the last three years of trading — it can certainly happen again this year.

  • In 2010, the eruption of Eyjafjallajökull interrupted European economic output
  • In 2011, Greece and its sovereign debt crisis threatened all of the Eurozone.
  • In 2012, the Eurozone’s future was doubted as Spain and Italy struggled, too

For 2013, no new “crisis” has emerged to lead mortgage rates lower and start a reversal — at least not yet. Should one occur, however, and should it be euro-related and far-reaching, we can expect it to re-ignite the flight to quality assets which tends to lead U.S. mortgage rates lower.There is an early candidate in Italy’s anti-austerity vote, plus mass protests in Portugal against the same. These events could be a spark to re-ignite safe haven buying. Or, they could quickly pass over.

This year’s home buyers and refinancing households can hope, anyway — especially the FHA-insured homeowners wanting to refinance ahead of the new FHA mortgage insurance premiums.The FHA changes go into effect April 1, 2013

Get A Free, Personalized Mortgage Rate

If you’re shopping today’s mortgage rates, you’ve likely noticed changes in the market. Rates are steadily rising for all types of loans, and rates are changing quickly, too.Be safe about your mortgage rate. Get a quote, complete with closing costs. If the numbers fit your personal budget and the mortgage meets your needs, consider locking that rate in — it won’t likely last.

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