LOW RATES!!

My prediction is the mortgage industry will begin to get busy due to LOW RATES because w/o funds we will stay in grid lock. With the availability of funds at such historical low prices, it will be the subliminal economic stimulus package the governement is looking for.

It is believed mortgage rates are going to be on the mind of the Fed this year to further stabilize the market. We believe it will be a plethora of very low rate activity this year for those that remain in the mortgage market. Many lenders have begun hiring additional operations staff to maintain the service levels and be ready for what the new year has in store.

U.S. mortgage rates, already the lowest since Freddie Mac started tracking them in 1971, have plenty of room to fall if history is any guide. The average 30-year fixed-rate mortgage is still relatively costly compared with the yield on 10-year Treasury notes, a benchmark for home loans. The difference, or spread, between them exceeded 3 percentage points last week for the first time since 1986. The gap has averaged 1.64 points during the past two decades. Add that figure to the benchmark Treasury’s yield on Dec. 24 and the resulting mortgage rate would be 3.82 percent, well below this week’s reading of 5.14 percent. It’s possible that the spread may narrow to 1.25 points because the government is “absolutely obsessed” with making home loans more affordable.

It has been projected that the 30-year fixed rate will drop as low as 4.25 percent by March, and perhaps sooner. Treasury yields held near record lows after industry reports showed falling consumer spending during the holiday season, adding to concern that an economic slump will lead to deflation. U.S. retail sales fell as much as 4 percent from Nov. 1 through Dec. 24 as households limited purchases to necessities and cut back on clothing, electronics and jewelry, according to SpendingPulse data. One of the Federal Reserve’s preferred gauges showed inflation at the lowest level since 2004, boosting demand for government bonds’ fixed income.

Look for LOW RATES for the months to come.