With 30-year fixed mortgage rates hitting their lowest level since the 1950s in November 2010 at 4.17 percent, rates had nowhere to go but up. And up they did, with marked of nearly a half percent in a matter of weeks. However, for the last week in December, rates are again declining. So where does that leave us for 2011?
According to Freddie Mac’s Chief Economist Frank Nothaft, these long-term mortgage interest rates will stay below 5 percent throughout 2011.
“While some rise in fixed-rates is expected, 30-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates on 5/1 hybrid ARMs [adjustable-rate mortgages] will likely remain below 4 percent in 2011,” predicted Nothaft.
The Freddie Mac economist said home value weakness would continue in 2011, thanks largely to high inventory levels of for-sale homes and REO properties. Northaft predicts U.S. price indexes are very close to bottoming out and will finish doing so in the first half of 2011. From there, a gradual yet sustained recovery will take hold. This will make buyer affordability the best its been in decades and Northaft expects more first-time buyers will enter the market in 2011, resulting in more home sales for 2011 than happened in 2010.
Source: Short Sale Daily News
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