Prospective homeowners may be happy to hear that 30-year mortgage rates may fall to as low as 4.2% by the end of 2009. A recent research note from Bank of America / Merrill Lynch has offered this prospective rate, which is expected to lower from the current rate of 4.85%. The good news is that if mortgage rates are actually lowered, it may show the beginnings of a slow housing market recovery. February home sales increased unexpectedly, so a market recovery is certainly possible.
Why Mortgage Rates May Fall
One reason that the bank gives for this lower rate is financial backing from the Fed. Because the Federal Reserve has stepped in to help support banks, homeowners’ need to bear the financial brunt of the housing market is expected to decrease over the next few months.
Housing Market Recovery Will Be Slow
While this looks like good news for the housing market – and economy as a whole – you should be reminded that continued job losses (the unemployment rate currently sits at 10%) and many more foreclosures on the horizon are likely to slow the market’s full recovery. However, experts believe they won’t stifle it completely. In fact, lowering interest rates and housing prices, along with the $8,000 tax credit for first-time homebuyers, leave economists predicting that housing sales will see an increase in the second half of 2009.
So what do you think? Does the likelihood of a lower mortgage rate by year-end sound enticing enough for you to take on a new 30-year mortgage?
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