The excitement about sub 4% rates in the last quarter of 2014 is over; it's a new year and that means new forecasts in a market that is constantly evolving. Mortgage analysts predict we'll see steady rates that will hold at 5%, an increase in property purchases from international buyers and more lenient down payment requirements. loanDepot home loan rates have hit under 4% for periods of time during 2013; rates low enough that one would expect increased market activity.
Freddie Mac predicts that mortgage rates will eventually hit 5% for the 30-year fixed home loan. The Mortgage Bankers Association reported similar results. Despite the numbers analysts caution that rates will vary from one consumer to another depending on their credit history. A buyer with a high FICO score and low debt to income ration can expect a lower rate than someone with a lower score.
Other lenders expect rates for a 30-year fixed to stay under 4% for most of the year (See rates for conventional loans at BestRateUSA). Inflation pressure is on the lower side of the scale in part due to lower oil and gas costs. Global issues are also expected to affect the housing market. Many international investors are flocking to the U.S market in order to acquire safer assets which will bring more money into the economy. Foreign buyers are more likely to purchase high end and luxury properties.
Credit requirements may also be significantly more lenient in the next twelve months. Current buyers who obtain a FHA loan have a median score of 682 while those who go with Fannie Mae or Freddie Mac have an average of 755. In order to make home buying more accessible Fannie Mae and Freddie Mac have plans to lower down payment requirements to 3%.
