The US Federal Reserve is trying to lower long-term interest rates, including home-mortgage rates. However, according to James Hagerty’s article “Under 5%, Mortgages May Be Near The Bottom” (from the Wall Street Journal), people hoping the already historically low mortgage rates will fall sharply from current levels “may be disappointed.”

Currently, as per Zillow.com mortgage firms are quoting rates averaging roughly 4.75% on 30-year fixed-rate mortgages.

However, according to Hagerty, “much further declines will be hard to achieve, partly because the mortgage-lending market has grown less competitive in the past year as hundreds of small banks and independent mortgage lenders have collapsed. The big banks that dominate the market are eager to boost their profits margins, not give deeper bargains to consumers.”

Mahesh Swaminathan, a mortgage strategist at Credit Suisse in New York, states that a 4.5% to 4.75 is the rate expected for borrowers with the strongest credit for the rest of this year. Hagerty says “Others say that is too optimistic. Assuming no big change in government policy, Walter Schmidt, an analyst at FTN Financial Capital Markets, sees a range of 4.75% to 5.5% for most of this year.”

In his article, Hagerty quote historical records which makes the current rates look incredibly low. “Until recently, 30-year fixed-rate mortgages hadn’t been below 5% since the 1950s. For the past couple of months, rates have been bobbing between about 5% and 5.25%.” The 30-year rate averaged 4.98% in the week ended March 19 is down from 5.03% the prior week, according to Freddie Mac’s survey.

Read James Hagerty’s full article “Under 5%, Mortgages May Be Near The Bottom” in the Wall Street Journal.

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