Refinance Now, Freddie Economist Urges
NEW YORK (
) -- Homeowners who are still paying mortgage rates much higher than the current national average below 4.5% better refinance soon, according to
Freddie Mac
(FMCC.OB)
Chief Economist Frank Nothaft.
In a commentary posted on Freddie's Web site on Monday, Nothaft indicated that rates will pick up at a healthy clip in the second half of 2011, with fewer refinancing opportunities as a federal program expires.
Rates have already begun to climb, according to Freddie Mac's weekly survey. The average rate for a traditional, 30-year fixed mortgage has jumped nearly 300 basis points to 4.46% from a historic low of 4.17% hit the week of Nov. 11.
"While fixed-rates are likely to remain below 5%, these rates are also expected to move gradually up during 2011, reducing the financial incentive to refinance for those borrowers who have not done so already," Nothaft said.
Additionally, the refinance program that's part of the Obama administration's "Making Home Affordable" plan is scheduled to expire on June 30, which will likely lead to lower refinancing volume.
Nothaft made those comments as part of an outlook for the broader housing market. He indicated that home prices will probably remain soft through early 2011, even as a seasonal bump in sales occurs next spring. However, Nothaft thinks that in late-2011, there will be a gradual, sustained recovery in sales and prices.
"Price indexes for the U.S. as a whole are likely close to bottoming out," he said.
-- Written by Lauren Tara LaCapra in New York
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