Mortgage interest rates—at 3.59 percent for a 30-year fixed rate loan and 2.92 percent for a 15 year loan—are now at their lowest level since May 2013*. Potential homebuyers in the last several years have been consistently hearing that mortgage interest rates are about to go up, but the downward trend of the last year and a half is unmistakable.
The reasons are complex, and of course individual borrowers may not find precisely these rates when they shop. But we recently huddled with our HFPC colleagues to pool our thoughts about the major forces that are pushing mortgage interest rates down.
InterestRatesThey fall into two broad categories: forces that affect the interest rate on Treasury securities (reasons 1-3) and those that affect the mortgage risk premium above the Treasury rate (reasons 4 and 5).
Slow growth and turmoil abroad: Though Europe isn’t facing the kind of turmoil it saw in 2011, we are seeing several years of slow growth there and in Japan and a slowdown in China, albeit from a fast pace. And with major turmoil in the Middle East and Ukraine, the United States looks like a much safer place to put money, driving down rates on Treasury debt that in turn drive down mortgage interest rates.
via The five major forces driving down mortgage interest rates.
