The Future of Mortgage Interest Rates and What It Means for Housing Recovery

A lot of attention has been paid in recent weeks to mortgage rates: after plunging last spring and staying at historic lows for six months, they started to rebound in November. With rates up to 5.11% at the beginning of the year according to HSH Associates and fluctuating since, many have been wondering what the future holds for mortgage rates, and how they will impact the tenuous housing recovery.

When mortgage interest rates originally dipped last May, many hoped it would spur home buying and help continue the mini-sales boom caused by the homebuyer tax credit. Similar to the tax credit - which pulled in the summer buying season and arguably didn't actually create many new buyers - the lower mortgage rates had a muted effect on home sales. Instead, they simply triggered a spike in refinancing, which accounted for 69% of all mortgages issued last year.

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