According to a group of industry experts, affordable mortgage rates in 2012 may to little to increase home purchase demands, HousingWire reports.
Mortgage loan rates are expected to remain near all-time lows through at least the first half of the new year, but the influence it will have on purchase demand will remain a mystery until consumers start to see the direction that the nation's economy is heading.
The Mortgage Bankers Association's most recent Weekly Mortgage Application Survey revealed that at the end of 2011, the average rate for a 30-year fixed-rate mortgage on a conforming loan dipped to 4.07 percent - the lowest rate in the category throughout the entire year. In addition, the rate for a 30-year FRM on a jumbo loan averaged 4.41 percent.
Fannie Mae chief economist Doug Duncan recently noted that despite some strong economic performances recorded at the end of 2011, the nation's economy will need to show greater improvement before prospective buyers will act on homes for sale.
"If you start to see a pick up in growth then you could see improvement in mortgage activity," said Duncan.
Additionally, Bankrate.com senior financial analyst Greg McBride anticipates mortgage rates to remain well below 5 percent, and should settle closer to 4 percent throughout the course of 2011. McBride also posited that if the nation's economy takes any more negative hits in the new year, that mortgage rates could continue their decline.
"If people see the economy start to strengthen appreciably, they may want to take advantage of that and refinance," McBride said. "If there is a slow down in economic activity, that will hold rates lower longer and people who have been continually improving their credit record will be able to get into the refinance market on better terms."
As industry analysts anticipate home purchase activity to be heavily dependant on economic growth in 2012, the most recent minutes from a U.S. Federal Reserve meeting in December shows that the agency expects a moderate pace of economic growth throughout the coming quarters. In addition, the Federal Reserve expects to see the national unemployment rate to trend lower through the year.