March 20, 2009

Analysts: Mortgage rates near low point

U.S. market analysts said historically low mortgage interest rates were unlikely to fall substantially further, in spite of federal intervention.

The Federal Reserve said this week it would purchase an additional $750 billion in mortgage-backed securities, prompting a 5 percent drop in interest rates that now average 4.75 percent for 30-year fixed-rate mortgages, reported.

Mahesh Swaminathan, a mortgage strategist at Credit Suisse in New York said long-term interest rates for favored borrowers could average between 4.5 percent and 4.75 percent this year, The Wall Street Journal reported Friday.

Analyst Walter Schmidt at FTN Financial Capital Markets predicts higher rates, between 4.75 percent and 5.5 percent.

Put in perspective, the long-term mortgage interest rates have not fallen below 5 percent since the 1950s, the Journal said.

Fifteen-year fixed-rate mortgages are also low, averaging 4.61 percent in the previous week, the Federal Home Loan Mortgage Corp. said.