Mortgage rates will likely remain very low, at least through mid-2012, according to ""Freddie Mac"":http://www.freddiemac.com.[IMAGE] Rates on 30-year conforming mortgages have hovered around 4.0 percent or lower for the past quarter. The GSE says that in large part due to the Federal Reserve's program for extending the maturity date for mortgage securities it holds. This program is expected to continue through the middle of next year.
This should keep fixed-rates for 15- through 30-year mortgages relatively low during the first half of the year, with rates edging up during the second half, Freddie Mac said in its latest market outlook.
In addition, the GSE says the Fed's guidance that it will likely keep the target range for its benchmark federal funds rate near zero though mid-2013 ensures that initial[COLUMN_BREAK]
interest rates for adjustable-rate mortgages (ARMs) will also remain extremely low throughout 2012.
Freddie Mac also said in its outlook forecast that housing activity will be better in 2012, but not robust. The GSE says to expect fewer single-family originations but more multifamily lending next year.
Looking at the macroeconomic picture, Freddie expects stronger growth, in the range of 2.5 percent in 2012. While the national unemployment will decline going forward, the GSE expects it to remain above 8 percent through next year.
""While the headwinds remain strong going into 2012, there are indications the economy and the housing market are gaining ground, albeit slowly,"" commented Frank Nothaft, Freddie Mac's chief economist.
Nothaft says sustained and increased job growth are essential to move the recovery forward Ã¢â‚¬" and by that he means monthly payroll gains well above the 130,000 average seen in 2011.
In housing, Nothaft says to look for the rental market to lead the way and for some improvement in the single-family space to pop up in parts of the country.
While green shoots of recovery appear to be beginning to take hold, the industry shouldn't set expectations too high.
""All told, next year will be another bumpy ride,"" according to Nothaft.