That mortgage loan prices are at historic lows is widely known (my email’s spam folder is full of reminders). What’s not as clear is why are rates so low and, more importantly, will they continue to stay low.
The Wall Street Journal has a fine article out today, Reasons Why Mortgage Rates Are Staying Low, which explains it all for us.
Basically, low rates are a reflection of the world’s economy. With continued uncertainty, investors are looking for safe, solid places to put their money, and US Treasuries are considered #1 in the world. Mortgage rates follow treasury bond rates (because, like 10-year bonds, mortgages tend to be paid off 7-10 years from origination).
A word of caution, however. Although new mortgage rates are expected to stay low (under 4.2% by year end), refinancing rates may rise. Keep that in mind if you’re looking to lock in a low rate.