What will 2015 bring for mortgage rates?

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The year ended with low mortgage rates around 3.75%.  It was an excellent year to refinance and additionally new regulations set up for an increasing number of buyers to enter the market.

For years now getting a mortgage without near perfect credit and 20% down was extremely tough.  Recently that changed.  Fannie Mae & Freddie Mac have put new lending guidelines in place that should make it easier to obtain a home loan.  The agencies have said they will now start backing 3% down loans. Currently, borrowers can get 3.5% down loans from the FHA but it requires the borrowers to pay mortgage insurance premiums for the life of their loans.

These two major agencies are lowering down-payment requirements so that it will be easier for loans to be classified as qualified mortgages. Even more key is that Fannie & Freddie have clarified when lenders will be on the hook for borrowers that default. Under the new regulations, loans with no missed payments for 36 consecutive months after first being issued will be backed by Freddie or Fannie in the case of a default.

The buyback issue was “the number one hindrance to mortgage lending. If it disappears, it would be a big boost to mortgage lending.” Said according to Lawrence Yun, chief economist for the National Association of Realtors. So toward the end of 2014 lenders started loosening up but what about 2015?

Wall Street is forecasting mortgage rates to move higher in addition to the 96% of consumers who believe mortgage rates have bottomed out. Experts have varying opinions of course. Justin McHood of MortgageCommentator.com says he expects a slight increase over 2015. However Dan Green, Chief Publishing officer at TheMortgageReports.com expects rates to move lower throughout the year ending 2015 below 3.8%.

My advice? Get today’s mortgage rates now. The higher the interest rates go the less you can be approved for, affecting your buying power.  Mortgage rates begin 2015 at their lowest levels in more than a year.  By 2016, rates could be higher or may have moved lower. There is no way to really know. If you need assistance in finding a mortgage loan officer, give me a call: 615-500-2748.