The Federal Reserve recently announced a plan to further stimulate the economy with a new bond purchase program. Because long-term Treasury bond yields are so closely tied to fixed mortgage rates, they could hover near record lows for some time.
During the week ending September 20, the average rate for a 30-year FRM was 3.49 percent, down from 3.55 percent a week earlier, according to a report from Freddie Mac. Meanwhile, 15-year fixed-rate mortgages averaged 2.77 percent, a notable drop from 2.85 percent in the same period.
In addition to the announcement from the Federal Reserve, a number of housing market gains experienced last month have caused investors to become more confident in the mortgage industry.
"New construction on one-family homes rebounded in August, rising by 5.5 percent to the fastest pace since April 2010," said Freddie Mac vice president and chief economist Frank Nothaft. "In addition, existing home sales increased by 7.8 percent in August to its strongest pace since May 2010."
As economic and real estate gains provide further financial safety and soundness for prospective homebuyers, this could result in elevated levels of activity during the final months of 2012.