Unless you’ve been living under a rock, you’ve probably noticed that mortgage rates are hovering near all-time lows.
The extremely popular 30-year fixed mortgage fell to a record low 4.19 percent in early October of last year, but has since risen to 4.86 percent, per Freddie Mac data.
The five year adjustable-rate mortgage hit a record low 3.25 percent a month later, but now stands at 3.77 percent.
While both are still historically low, it’s clear mortgage rates are trending higher.
They simply can’t sustain the lows achieved in 2010, but that doesn’t mean they’re set to skyrocket either.
Mortgage rates are driven largely by the health of the economy.
As a rule of thumb, bad economic news will drive mortgage rates lower and good economic news will push rates higher, partially to stem inflation worries.
Things are expected to get better in 2011, but better is a very relative term.
We won’t be fully recovered this year, given the fact that foreclosures are expected to rise above levels seen last year and home prices will likely stumble.
So don’t expect mortgage rates to climb much higher—in fact, the 30-year fixed should stay below five percent and the five-year ARM should stay below four percent, so there’s no rush to do much of anything.
However, if you’re currently pondering which type of loan to get, such as fixed vs. adjustable, consider the fact that mortgage rates will probably be higher in the next few years, so a fixed product might be best.