Have Interest Rates on Mortgages Hit Rock Bottom?

The interest rates on mortgage loans have been moving in a downward direction for the past few years. Recently, the rates even fell below the five percent mark, coming in at about 4.92 percent on average for a 30-year fixed rate loan. This leaves many financial experts and consumers alike wondering if the interest rates on mortgages have finally reached rock bottom. Unfortunately, there is no crystal ball revealing this information, but you can take a look back on the behavior of interest rates to come to your own conclusion as to what rates will do during 2011.

The lowest point for the interest rates on mortgage loans was in the middle of November in 2010. After reaching the lowest point for the year, interest rates continued to go back up for the remainder of the year. According to HSH Associates, which publishes information on mortgage loans and other consumer loans, “There is a good chance we have peaked, give or take a few basis points” when speaking about interest rates.

The Mortgage Bankers Association predicts that the average 30-year fixed rate on mortgage loans will reach 5.1 percent by the end of 2011. The organization’s predictions also reach into 2012, when it predicts that the 30-year fixed rate will increase again up to 5.7 percent. According to the chiefe economist of Freddie Mac, Frank E. Nothaft, “While some rise in fixed-rates is expected, 30-year fixed-rate loans are likely to remain below 5 percent” throughout 2011.