Refinancing rates to stay low in 2012
While mortgage rates, like many other factors in the economy, are often unpredictable, most economists assumed rates would rise a little in 2011 rather than drop to record lows. The continuing uncertainty in the U.S. economy is likely to keep mortgage rates hovering below five percent, at least for the first few months of 2012.
Most Americans would prefer to hear that the economy is improving and strengthening, but a positive side effect of weak economic reports is often low mortgage rates. If you are a homeowner with some equity, decent credit and a solid job, a home refinance may be part of your New Year’s plans. If so, you may want to move quickly in case the economy takes an unexpectedly positive turn and mortgage rates rise. So far, though, economists think 2012 will look a lot like 2011.
“It’s important to recognize that we’re ending 2011 on a stronger note than we’ve seen throughout the year. Unfortunately, however, our 2012 outlook is not as rosy as our forecast for the fourth quarter of 2011,” said Fannie Mae Chief Economist Doug Duncan. “Despite recent near-term improvement, the housing market will likely remain subdued next year – a reflection of the winter season, an expected slowdown in economic activity, and a potential increase in distressed sales. Moreover, we expect that the country’s fiscal problems will be hotly debated over the coming year and will weigh on the market. The very large fiscal impact of pending tax and legislation decisions will likely tamp down overall growth expectations for 2012.”
Mortgage rate forecast
According to HSH.com, mortgage rates are likely to stay low for the next few months.
“For the next nine weeks, we think that the overall average for 30-year fixed-rate mortgages (as measured by HSH’s FRMI) will run in a narrower-than-last-time range of 4.20% to 4.50%, while the overall average for Hybrid 5/1 ARM should find bookends of 2.95% to 3.25%. For conforming, 30-year fixed rates, we expect boundaries of 4% to perhaps 4.30% to take us through mid-February,” according to the HSH Two-Month Forecast for Mortgage Rates.
If you are thinking of refinancing, it may be time to test the waters with a mortgage lender.
