Mortgage Rates Near All Time Low

Our Nations Lending originators hear the question, “Can mortgage rates move any lower?” The answer to that is, “Maybe, but somewhat unlikely.” Driven by a number of factors, mortgage rates in the United States are currently near their all-time lows seen in 2012. There are certainly economists and investors arguing that rates will move higher, and rates will move lower, so let’s take a quick look at what’s important.

Our branch managers often tell their staff that mortgage rates may go lower because the U.S. economy is still not growing with any strength. The latest employment reports show a slowing in job growth which could be predecessor to a contraction in employment. Corporate profits, while up slightly in the first quarter after declining in 2015 for the first time since the Great Depression, are not growing.

And our mortgage rates are impacted by what happens overseas. So some say that our rates may go lower because of the global economy and markets, for instance, the German Bund, their ten-year bond, has reached zero percent interest, and Japan’s central bank has had negative interests rates for several months.

But Nations Lending branch managers know that there are signs of improvement, and those generally, eventually, lead to higher rates. Some portions of the economy, like housing, are doing well and may pull the rest of the economy’s growth upward. And if the economy does begin to increase growth, many anticipate then employment will grow. Rates may go up because perhaps the zero to negative rates in Japan and Europe may result in economic growth.

The Federal Reserve’s Open Market Committee meets this week, but it is expected to leave short-term rates alone. The expectation, however, is that its next move will be to raise short-term rates. Mortgage rates, however, move independently of the Fed, and in fact rates are lower now than when the Fed raised its rate in December for the first time in nine years.