Mortgage Rates Stall — Are Lower Rates Ahead?

Freddie Mac Weekly Trends

Mortgage rates are on a slow and steady path to, well, nowhere. A look at the weekly rate chart from Freddie Mac shows that mortgage rates have been fairly steady since last summer. Indeed, one can argue that fixed rates in April actually edged down.

The rates we’re seeing are a surprise to a lot of people. Rates this year, according to several solid sources, were supposed to edge higher, to reach 5 percent of so. At this point it hasn’t happened and given that a third of 2014 is over maybe it’s time to ask if rates will remain stable or — perhaps — even decline.

If you think of money as a commodity then we can look at the laws of supply and demand. There is a lot of cash floating around out there looking for a safe and secure home. At the same time lending activity is down — just look at some of the big bank quarterly reports.

In effect we have a lot of supply and slowing demand. The question is not why rates are steady it’s why they have not gone down further.

Today’s rates are absurdly low by historic standards. Standard & Poors tells us that typical mortgage rates during the past 40 averaged 8.6 percent — about twice today’s rates.

So could mortgage rates go lower in 2014? Not being in the mortgage prediction business it’s hard to say, however rates today are way short of 5 percent and for the past month or so have been down a touch.

Mortgage Rates & The Stock Market

All of this is good news for borrowers, people who want low mortgage rates, and sellers, people who want as many qualified borrowers as possible to bid for their properties.

The stock market is near all-time record highs while household income, according to the Census Bureau, is 9 percent lower than in 1999. Anyone see something odd about these two realities?

How can the stock market continue to rise while incomes continue to fall? How can the stock market rise if high-speed traders — who add no value to the marketplace — are frozen out of the market as a result of federal and state investigations into front-running? Maybe more money should be moving from a rigged stock market to a mortgage marketplace where all people want are low rates and the security of homeownership.

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