"Rates should be going up because all you have to do is look at the revision to third-quarter GDP number. The U.S. economy is growing," said Joel Naroff, founder and president of Naroff Economic Advisors. "Why they're where they are is because of the rest of the world."
The global gloom
Investors continue to keep money safe in U.S. bonds, sending their yields down as the outlook for the global economy remains uncertain. Mortgage rates tend to track the 10-year Treasury yield.
"Where else will someone put their money when you have what's going on in Europe, Japan?" asks Naroff. "When you look at the developing world, you have more questions than anything else. It's the U.S. or nothing."
Stateside, things look ... mostly good
Back in the U.S., the economy is doing better than first thought. The federal government this week revised the third-quarter growth domestic product to 3.9 percent from a previously estimated 3.5 percent, surprising economists who were expecting a decline to 3.3 percent.
That comes after last week's consumer price index showed that inflation remains well under control, which should quell any concerns from the Federal Reserve. If inflation becomes a problem, the central bank would likely raise the federal funds rate, a benchmark for interest rates on business and consumer loans, including mortgages, as a reactive measure.
"I would have thought the stronger GDP number would have boosted interest rates, but it didn't. Maybe it's too rear-view for the markets," says Paul Edelstein, director of U.S. financial economics at IHS Economics.
Not all rosy
Despite the rise in GDP, not all indicators pointed to a supercharged economy. Consumer confidence fell in November to the lowest point since June, disappointing economists and investors. The Standard & Poor's/Case-Shiller home value index on Nov. 25 once again showed that home-price gains slowed in September, marking the ninth straight month of deceleration.
"Housing is kind of slouchy," says Edelstein. "The markets don't like seeing year-over-year appreciation slowing."
Reasons to refinance
Persistently low rates have still allowed many of Scott Sheldon's borrowers to consolidate equity lines of credit and first mortgages into a 30-year fixed-rate home loan.
"It makes a lot of sense," says Sheldon, with Sonoma County Mortgages in California. "That makes up 40 percent of my business."