By Yali N’Diaye
WASHINGTON (MNI) – Mortgage giant Freddie Mac Monday said it
expects the 30-year fixed mortgage rate to rise to 5.9% by the end of
2012.
The government-sponsored enterprise reported last week that the
30-year rate rose to 5.05% in the week-ended February 10, its highest
level since April 22, 2010, when it stood at 5.07%.
The 15-year rate averaged 4.29% in the Feb. 10 week, up from 4.08%
the previous week.
In its monthly outlook released Monday, Freddie Mac also estimated
that progress in reducing unemployment — “a keystone of any forecast of
housing and mortgage markets” — was likely to remain gradual.
It said the trend in initial claims is pointing to a “stronger
labor market in 2011″ and job openings data are also pointing to more
hiring going forward.
That said, “The pace of the jobs recovery is still expected to be
far from exciting, though, as the process of deleveraging and healing
the damage from the financial market crisis restrains overall economic
growth,” the report added. “We look to other factors, therefore, to help
support the housing recovery.”
The agency expects the unemployment rate to decline to 9.0% by the
end of 2011 and further down to 8.2% at the end of 2012. It lowered its
2011 annual rate to 9.2% from a 9.4% estimate in January.
Real GDP growth is seen accelerating from an annual rate of 3.8%
this year to 4.0% in 2012, with inflation rising from 1.3% in 2011 to
1.5% next year.
Against this backdrop, the 30-year fixed mortgage rate would rise
to 5.5% at the end of this year and 5.9% at the end of 2012.
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: M$$AG$,M$U$$$,MAUDS$]