The November 2009 mortgage rate forecast issued by the Mortgage Bankers Association (MBA) predicts that mortgage rates will be declining slightly in the fourth quarter of 2009 but will be rising throughout 2010 and 2011.
In particular, the MBA mortgage forecast predicts that the average rate for 30-year fixed-rate mortgages will decrease from 5.2% in the third quarter of 2009 to 5.1% in the fourth quarter. This will be actually and the estimated average rate for the whole year, which will represent a 90 basis point drop compared to the average rate of 6% that prevailed in 2008.
For 2010 and 2011, the November 2009 mortgage rate forecast issued by MBA predicts that the average rate for 30-year fixed rate mortgages will increase to 5.5% in 2010 and to 6% in 2011.
The increases in mortgage rates will be driven by increases in Treasury rates. In particular, the 10-year Treasury yield is predicted to rise from 3.2% in 2009 to 3.7% in 2010 and to 4.2% in 2011.
MBA predicts somewhat different dynamics for the 1-year Treasury-indexed Adjustable Rate Mortgages (ARMs). Although the average rate for these mortgages is predicted to drop from 4.8% in the third quarter to 4.7% in the fourth quarter of 2009, it is not predicted to rise in 2010 but remain stable instead at the 2009 average of 4.8%. In 2011 it is predicted to rise to 5.3%.
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