2009 Mortgage Rates - What the Experts are Saying

This is from the blog of Brandon Cornett in Austin, TX and the Home Buyer Institute:

2009 Mortgage Rates - What the Experts are Saying

"What kind of interest rates can we expect on home mortgage loans in 2009? This is a common question among home buyers, and rightfully so. With so much turbulence in the economy, it's hard to keep track of the ups and downs. So let's take a quick poll of what the experts are saying, with regard to 2009 mortgage rate predictions.

Current Mortgage Rates

Let's start with what we know right now. At the time this blog post was published, Freddie Mac's weekly summary of the primary mortgage market told us the following:

* Average rate for a 30-year fixed mortgage was 5.04% (down slightly from previous weeks)
* Average mortgage rate for a 15-year fixed loan was 4.68%
* Average rate for the 5/1 ARM loan (most common type of adjustable mortgage) was 5.04%


This data was for the week of February 19, 2009. But what about the rest of the year? What will happen to 2009 mortgage rates in the months to come? This is a popular question among consumers right now, and understandably so. Unfortunately, there are no crystal balls that can tell us what mortgage rates will do through 2009 or beyond. So the best we can do is make an educated guess based on current conditions. And for that, I turn to some folks who are much more educated on this subject than I am.

Predictions for the Rest of 2009

In December of 2008, U.S. News ran an article that cited the 2009 interest rate predictions of HSH Associates (a mortgage information service). They seemed to think that mortgage rates would swing between 5.5% and 6% for much of 2009, and then rise to just over 6% by the end of this year. Based on the weekly summaries provided by Freddie Mac, these predictions seem a little high to me. But it's too early to say if their year-end predictions will be more or less accurate.

More recently in January, the New York Times published an article that quotes Orawin Velz, the vice president of economic forecasting for the Mortgage Bankers Association. She estimated that 2009 mortgage rates would hover at, or slightly above, 5% for most of the year.

One week after the New York Times piece mentioned above, an article in Business Week cited projections from Freddie Mac that had mortgage rates wavering between 5% and 5.25% for the remainder of 2009."