Purpose
Refinance Purchase Home Equity

Loan Type
Fixed ARM Interest Only FHA

Amount

State
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

Display Mortgage Rates &
Refinance Rates in your State

Are Low Mortgage Rates Coming To An End Soon?

By Kevin Landis

As we all know, market prices are determined by supply and demand and the same applies to mortgage rates, which are in a way the prices for the mortgage loan markets. Back when the economy began to falter and banks, along with investors, that provided mortgage loans also started to retreat with their funding, especially around 2008, mortgage rates were seen on the rise. For most of the 2008 and the early part of 2009, any home borrower who wanted a mortgage loan would have to pay a rate of well above 5.5%. But then as consumer spending also started to pull back, demand for mortgage loans were seen on the decline as well and that brought down mortgage rates a little bit. For that time being, it seemed mortgage demand and supply had found its balance, but still at above 5.5%, not the most affordable as considered by most home buyers.

Low Mortgage Rates and Strong Mortgage Supply

To salvage the housing market by providing low and affordable mortgage rates and thus attracting more home buyers to the market, the federal government and the Federal Reserve injected massive funds into the mortgage backed securities market in an effort to prop up mortgage loan funding, absent of private investor participation and the lending support from many banks. Eventually, mortgage rates were lowered down to below the 5% mark. Since then, the economy has shown signs of slow recovery and some private mortgage investors have been coming back. A good level of mortgage supply can be maintained with more and more private sector involvement, even when the government pulls out its support, so to continue to provide the relatively low mortgage rates.

Low Mortgage Rates and Weak Mortgage Demand

Barring from a sudden burst of economic revival, demand for mortgage loans will remain anemic. Although the generous tax credits for home buyers have spurred new mortgage loan borrowing activities, as rightly evidenced by the somewhat picking up in the rates, the high unemployment rate will still be the biggest obstacle to the return of a more demand-driven mortgage loan market. Until then, the low mortgage rates are not coming to an end soon.

Related posts:

1. When Are Low Mortgage Rates Coming To An End?
2. What Causes Mortgage Interest Rates To Go Up And Down So Dramatically?
3. Could Mortgage Rates Go Even Lower?
4. Is Mortgage Rationing Coming Back?
5. What Moves Mortgage Rates?