Quick Interest Rate Update >>>>> 5% Rate By the end of 2014, the average U.S. rate for a 30-year fixed mortgage probably will be 5%, Duncan said, compared with 4.3 percent at the end of 2013. The average during the past two decades is 6.27%, according to Freddie Mac data compiled by Bloomberg. Borrowing costs also defied conventional wisdom the last time the Fed pulled back on stimulus. More than three years ago, when the central bank concluded its first round of quantitative easing, housing forecasters said home-loan rates would rise on weaker demand for mortgage-backed securities. Instead, as investors fled 2010’s European sovereign-debt turmoil, loan rates tumbled to then-record lows in November. That didn’t stem the year’s plunge in home sales, which was caused by the expiration of a federal tax credit that paid buyers $8,000. The Fed began purchasing mortgage bonds guaranteed by Fannie Mae, Freddie Mac and Ginny Mae in January 2009 to bolster the economy and the housing market by reducing financing costs. The strategy had never been tried before. In the first round of purchases, which ended in March 2010, the Fed acquired $1.25 trillion of mortgage bonds
Posted on: Mon, 17 Mar 2014 17:59:44 +0000
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