Freddie Mac: Low mortgage rates to remain throughout 2011
Mortgage interest rates will remain low throughout 2011 as the U.S. economy continues to deal with mixed unemployment news and a moderate recovery, Freddie Mac said in its February 2011 economic outlook report released Monday. Researchers at the government-sponsored enterprise say 30-year, fixed-rate mortgages are likely to remain in the low-to-mid 5% range throughout the rest of the year, which is low when compared to historic benchmarks. The report concluded that homebuyer affordability is still at a record high due to monthly payments tied to lower mortgage rates, but mixed labor market reports are keeping the recovery tepid at best. "Our outlook anticipates that hiring will gradually improve and the unemployment rate will trend down, albeit with an occasional uptick," Freddie Mac's report concluded. However, the report added that "the most widely followed labor market report, the January monthly employment report, sent confusing signals." Freddie Mac said, "Job growth was well below expectations, at just 36,000, but the unemployment rate fell nearly half a percentage point, to 9%." Initial jobless claims fell about 8.6% last week coming in below most analysts' estimates and dropping to the lowest level since the summer of 2008. Last month, Freddie Mac Chief Economist Frank Nothaft said home sales may not improve as much as expected in 2011 because of rising mortgage rates, but he still estimated a 10% increase from last year as housing and the overall economy pushes through to recovery. Researchers at the GSE said bad weather in January may have caused hiring figures to stall. Either way, Freddie Mac expects interest rates to move higher during 2011, but not high enough to dampen the historic period of affordability homebuyers are now experiencing. Write to Kerri Panchuk.