A new forecast from Freddie Mac suggests that mortgage rates will remain stable for the first two quarters of 2015.
The government-sponsored enterprise expects rates to stay around 4% thanks to uncertain economic outlooks beyond U.S. borders and the resulting "flight to safety" of investors to Treasury bonds. Overall U.S. economic recovery, thanks partly to low interest rates and irrespective of currency questions in Europe, war in the Middle East and slowing economic output in Asia, should lend cautious optimism to the housing market, according to Freddie Mac Chief Economist Frank Nothaft.
"The reprieve in interest rates and drop in gas prices should help to spur economic growth," Nothaft said. "Until rates start to rise later in the year, housing markets should respond positively and we anticipate increases in home sales and continued improvement in construction activity."
Nothaft also expects low interest rates and wage growth to cause a spike in refinancing, as borrowers feel more secure to take advantage of low rates.
The current estimate for 2015 originations is $1.2 trillion, up from the previous month's forecast of $1.1 trillion. This suggests origination volumes this year will match those seen in the previous year.
