January 20, 2015 4:01PM
Freddie Mac says it expects mortgage rates to hover around 4% through mid-2015, and while there are some of the positive tailwinds buoying the economy at the start of the year, some may not stick around for long.
Expect mortgage rates to remain around 4% for the first two quarters of the year as long as uncertainty in foreign markets continues to result in a flight to safety into U.S. Treasury long-term bonds, the GSE reports.
“On balance there are a lot of positive opportunities in the U.S. economy at the start of the year, and the real question is whether or not households and businesses will be able to seize these opportunities and make the most of them. The reprieve in interest rates and drop in gas prices should help to spur economic growth,” says Frank Nothaft, Freddie Mac vice president and chief economist. “Until rates start to rise later in the year, housing markets should respond positively and we anticipate increases in home sales and continued improvement in construction activity. With rates lower at the beginning of the year, we’ll see higher than expected refinance volumes as well.”