Strains on the global financial markets continue to pose significant downside risks to the economic outlook.
Austin, TX (PRWEB) December 20, 2011
The Homes.org weekly analysis of mortgage rates has found a number of factors that have influenced the movement of mortgage rates in the last quarter of 2011. Today, the 30-year fixed rate mortgage is 3.94%. This is a record low that was first achieved in October of this year. the 15-year fixed mortgage is also now at a record low of just 3.21%.
Both national and global activities are affecting the mortgage rates seen in the U.S. Below are the top three factors that are influencing whether mortgage rates remain low or begin to swing upwards.
EuroZone Economic Uncertainty
The economic troubles in Europe were found to be the most influential factor for mortgage rate movement in 2011. The health of the European economies is directly correlated to the increased buying of U.S. bonds which has helped to keep mortgage rates suppressed. However, the Federal Reserve recently noted, "Strains on the global financial markets continue to pose significant downside risks to the economic outlook."
Fed's Attempts to Boost the State of the Real Estate Market
The Fed has been taking actions and buying mortgage backed securities to keep the mortgage rates low in hopes that it will help to boost the slow-to-recover real estate market. Though there are signs of overall improvement in the real estate market compared to last year, the progress hasn't been as fast or as great as hoped. The Fed, which has been keeping the federal funds rate at a record low 0-.25%, is expected to announce a strategy for better forecasting rates as early as January of next year.
Unemployment in the U.S.
The unemployment rate in the U.S. greatly affects a number of economic factors which feed in to average mortgage rates. Consumer Sentiment, Personal Consumption Expenditure (PCE), Consumer Spending and more will rise and fall with the unemployment rate. The latest Jobs Report announced that the national unemployment rate dropped to 8.6%. However, though thousands of jobs were added, the drop was partly due to thousands of people abandoning their attempt to find work.
Regardless of which way mortgage rates move, no significant swings are expected in the beginning of 2012. Rates will likely remain near record lows for the first few months of the new year because no major changes are expected to occur with any of the three factors listed above within that time period.
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