Farewell 3% mortgage rates – CNNMoney 06-06-13

Salient to Investors:

Freddie Mac said the average 30-yr fixed-rate mortgage is at 3.91% versus 3.3% in early May. Doug Duncan at Fannie Mae said it is unlikely that rates will ever be that low again because when QE ends, private investors will demand higher rates for borrowers.

The Fed will stop bolstering the housing market – QE has enabled lenders to sell mortgage loans at low interest rates and recoup their money immediately, plus profits.

Keith Gumbinger at HSH.com said expectations of Fed tapering have moved forward to September or sooner as the economic revival gains traction, and any positive future reports will push rates higher. Gumbinger said the 30-yr rate hit a 37-year low in 2003 at 5.23% and it’s likely we will move closer to that mark as we grind forward.

Wendy Cutrefelli at Bank of the West said low rates occur when the economy is in distress but the market believes the economy is getting stronger.

Historically, 30-year loans are usually 5.5% or higher. Mortgage rates track Treasury yields with the spread holding fairly constant.

Read the full article at http://money.cnn.com/2013/06/06/real_estate/mortgage-rates/index.html?inf_contact_key=a8e76bc9e023039ef0b87be2a7f42b042f25744c2e31d9e081dc767a566c9401

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