Fixed mortgage rates recently fell to new all-time lows and one government agency says they could remain at these levels for some time.
After the implementation of QE3 to further stimulate the bonds market, the Federal Reserve says rates for mortgages and other types of credit may remain near current levels for consumers until at least 2015.
"In the category of communications policy, we also extended our estimate of how long we expect to keep the short-term interest rate at exceptionally low levels to at least mid-2015," Federal Reserve president Ben Bernanke said. "That doesn't mean that we expect the economy to be weak through 2015."
Following the announcement of QE3, mortgage records indicated the average rate for a 30-year FRM dropped to 3.36 percent during the week ending October 4, according to a report from Freddie Mac. Meanwhile, 15-year fixed-rate mortgages dipped to 2.69 percent, from 2.73 percent a week earlier.
In addition to QE3, a slow in the Gross Domestic Product growth rate to a revised 1.3 percent in the second quarter was believed to have contributed to the lower rates, said Freddie Mac vice president and chief economist Frank Nothaft.
Housing market gains also played a notable role
A number of recent improvements in the real estate industry have may have also played a part in the affordability of fixed mortgage rates.
During the month of July, the 10- and 20-City Composites appreciated 1.5 and 1.6 percent, respectively, according to the most recent Standard & Poor's/Case-Shiller Home Price Index.
"The news on home prices in this report confirm recent good news about housing," said Index Committee chairman David Blitzer. "Single-family housing starts are well ahead of last year’s pace, existing-home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing."
Further, existing-home sales, including single-family properties, condominiums, co-ops and townhouses, spiked 7.8 percent in August from the previous month, according to property data from the National Association of Realtors. This development pushed the seasonally adjusted sales rate to 4.47 million units.
As a result of the rising home sales rate, the median price of these types of properties increased 9.5 percent on an annual basis to $187,400, the report said.