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Stronger economic data is moving forecasts for long term interest rates higher for 2011. The economy appears to be growing faster and more efficiently than what many analysts had been predicting and thus the Mortgage Banker’s Association has “scaled up” its rate forecasts for this year but recent data reveals that there may be a reprieve from the incline. The last weekly bench mark posting from bankrate for 30 year fixed rate mortgages moved higher to 4.96% which was an increase of 4 basis points. The national average posted by bankrate for a 15 year fixed rate mortgage was 4.29% which was an increase of 8 basis points. In recent market news, the price on the benchmark ten year treasury rose, pushing the yield down to 3.41%. Strong economic reports are bearish for the bond market and generally push mortgage rates higher. Borrowers who want to capture lower mortgage rates are moving to close. Freddie Mac reports that 15 year terms have higher monthly payments but that the interest rate is usually lower and equity builds faster. A 20 year fixed rate term can build equity more quickly and has a lower interest rate than a 30 year FRM according to Freddie Mac. Most popular today are the 30 year term FRM’s but these come with a higher rate of interest attached which means that you will pay more interest over time but your monthly payment will be lower. Godd News recently is that Freddie Mac officials reported that U.S. mortgage rates dropped this week after months of steady inclines. The average 30 year fixed rate mortgage bumped down a bit from 4.86% to 4.77% on average according to Freddie Mac reports. It should be noted that this only appears to be a dip in normal fluctuation and not a steady trend. Author: Stephen Johnson
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