This week, the average interest rate on 30-year, fixed-rate mortgages dropped back to its record low of 3.91%, falling from 3.95% the previous week. Interest rates on 15-year, fixed rate loans also remained low, averaging 3.23% nationwide, down very slightly from last week’s 3.24% rate. Federal Reserve Chairman Ben Bernanke has lowered interest rates to all-time lows and kept them there in an effort to strengthen the nation’s housing market. Bernanke has called recovery of the housing market essential to U.S. economic recovery.
“Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,” Bernanke said in a letter to the Senate Banking and House Financial Services Committees reported by Bloomberg News. Bernanke’s letter accompanied a 26-page report on the current state of the housing crisis and the plight of federal mortgage giants Fannie Mae and Freddie Mac.
The Federal Reserve has kept mortgage rates anchored at record lows for the past 9 consecutive weeks, refusing to push interest rates above 4% since early November. Bernanke has vowed to keep interest rates low through mid-2013 but is under considerable congressional pressure to find additional ways to goose the economy. The impact of the 2012 election on the balance of power in Washington could also affect the direction of economic recovery.
The bottom line, warn experienced Destin Realtors, is that, while mortgage rates are expected to remain fairly low through 2012, it is unlikely that they will remain under 4% much longer. As the economy continues to recover, federal economists are predicting a gradual rise in mortgage interest rates to 4.5% by the end of 2012, hitting 5.4% in 2013. If you’re considering buying a home in the Destin area, the time to buy is now while mortgage rates are still at record lows.