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Freddie Mac: U.S. Housing and Economic Outlook 2015

2014 is coming to a close, what does this mean for rates? Where will they go?

According to Freddie Mac, we may see a rate increase in 2015. It is definitely not the time of year to procrastinate on taking advantage of today’s low rates, whether it be refinance or a new mortgage purchase.

As of November 13, the average fixed-rate (FRM) and adjustable-rate mortgages (ARM) broken down are:

30-Yr FRM = 4.01%
15-Yr FRM = 3.20%
5/1-Yr ARM = 3.02%
1-Yr ARM = 2.43%

The fees and points are:

30-Yr FRM = 0.5
15-Yr FRM = 0.5
5/1-Yr ARM = 0.5
1-Yr ARM = 0.4

When compared with months prior in January 2014, 30-Yr FRMs were 0.40% higher. 15-Yr FRMs were 0.25% higher, 5/1-Yr ARMs were 0.08% higher, and 1-Yr ARMs were 0.13% higher in trend.

Despite the expectations of higher rates in the near future, Freddie Mac’s Vice President and Economist predicts a higher volume of activity in the Purchase market. Housing starts are predicted to increase between 2014 and 2015 by as much as 20%, and home sales by 5%.

Refinance activities were definitely higher from 2012 and into 2014. Just as the second quarter refinance observations predicted, refinance activity is predicted to decline by as much as 8% as we move into 2015 with higher interest rates and home prices. However, with an increase in household incomes, the purchase market may still be able to see a decent amount of activity as this would offset home price appreciation.

The expected rate average for 30-Yr FRM is 4.6% and 2.9% for 10-Yr treasuries. Housing activity in 2015 will certainly rely on the growth of the economy.

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About the Author: Jessica Lucas is the managing editor for Mortgage Home Base, a top real estate finance blog dedicated to helping borrowers and home buyers understand the home loan process. Follow Jessica on Google +, and share your comments here. .
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