Mortgage Refinance Rates Forecast


As you know, interest rates change with the trends of the market.  The current mortgage refinance rates for a fixed 30-year mortgage is 4.75%.  Fixed rate refinancing for a year-15 mortgage is currently at 4.00%.  A 5/1 adjustable rate mortgage right now is 3.25%, but the trend for higher rates could push this amount up this coming year.  There are several factors that will determine mortgage refinancing for 2011.

First, keep your eye on the economy.  Economic trends factor in hugely to dictate whether a higher FHA mortgage insurance premium will be seen this year along with what conventional rates will be.  The Federal Reserve stimulus along with tax agreements seem to ensure that the economy will continue to climb through 2011.  What this means for FHA mortgage rates, and all other mortgage refinance rates, is that they will slowly but surely increase throughout this year and into the next.

Is the Trend for Higher Refinance Rates on the Horizon?

Another factor is that homebuyers are going to start returning in larger numbers.  Improvement in the labor market and still very reasonable interest rates will encourage people to buy homes and seek mortgage rate refinancing.  There might still be somewhat strict underwriting practices this coming year in determining applicants’ personal rates on 15-year mortgage and 30-year mortgage fixed rate refinancing.

Then, an additional factor worth considering is that the Federal Reserve program called Quantitative Easing II (QEII) may or may not end.  It was only initiated in November 2010, but its goal to foster low interest rates has had the opposite effect.  However, there certainly has not been a spike in interest rates—an occurrence that could have forced the economy back into another recession—so there is talk that the program might be extended instead of terminating mid-2011 as originally planned.  Either way, it can be agreed that a trend for higher rates will be seen in 2011.

These are some of the main factors that play into FHA interest rates, conventional rates, and mortgage refinance rates on the whole.  While a higher FHA insurance premium and other rates on those holding a 15-year mortgage or 30-year mortgage are expected to increase, that means the economy is improving, as long as mortgage rate refinancing and other rates in regards to mortgages increase at a gradual, manageable pace.  Having said that, rates are still quite favorable, and you can still take advantage of fixed rate refinancing.


Will Mortgage Refinance Rates Rise in 2011?

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