Mortgage giant Freddie Mac (FRE) said on Jan. 15 that rates on 30-year fixed-rate mortgages fell below 5% this week — the lowest level since it began surveying lenders in 1971.
The average rate on a 30-year fixed-rate mortgage was 4.96%, with a fee equal to 0.7% of the mortgage, for the week ending Jan. 15, 2009. It was down from last week when it averaged 5.01 percent and has been falling for 11 straight weeks.
Treasury yields have developed as expected over the past few months. I expect the same direction for mortgage rates: They will continue to drop much much lower than where they are now. As Treasury yields move toward zero, mortgage rates will drop to between 2% and3%. Whoever thinks of getting in now to get a “great bargain” should think again and wait. Please consider phase 8 of the business cycle.