The effect of cheaper gasoline
Falling oil prices also have made investors nervous and pushed mortgage rates down a bit, says Brett Sinnott, director of secondary marketing at CMG Mortgage in San Ramon, California.
"The crash in oil prices is making some huge splashes in the world economy," he says. "It's definitely helping us."
Lower gasoline prices have put more buying power in consumers' hands and have made homebuyers feel somewhat more secure about the economy.
Anxiety helps interest rates
But the situation in Russia, as well as falling fuel prices, make investors nervous. Whenever investors get anxious, they tend to park their money in safe investments, such as U.S. Treasury bonds and mortgage bonds. The higher demand drives yields on those investments down, and mortgage rates tend to follow.
Based on how much the yields on the 10-year Treasury note have fallen, rates could be even lower now, Sinnott says.
"You are not seeing rates move as much as the decrease in the 10-year yield," he says.
Should you wait for lower rates?
Borrowers who think rates might drop lower over the holidays shouldn't gamble too much, mortgage professionals say.
"For people who missed out on dropping rates, this may be your second chance to lock a low rate for the next 30 years," Becker says.
Applying for a mortgage and gathering documents over the holidays is not what most people want to do, but the effort might pay off.
"If they wait until January, it's possible they will get a good rate, but I wouldn't put it off too long," says Pava Leyrer, director of training for Northern Mortgage Services in Grandville, Michigan. "I think this first quarter is really going to show what is going to be happening with rates."
The turning point for rates will be when the Fed announces it will start raising the federal funds rate, Sinnott says. "When that happens, you can probably expect rates to go up."
The Federal Open Market Committee ended its two-day meeting on Dec. 17 and didn't say when exactly it plans to raise rates. The Fed says it will be "patient" in normalizing monetary policy, according to the statement released after the FOMC meeting. That is similar to what the Fed had been saying in previous meetings, when it committed to keeping rates low for a "considerable time."
But as the economy strengthens in 2015, the Fed's position might change quickly, Sinnott says. "If you have any plans on getting a mortgage, get started now so that by the first of the year you are done and settled," he adds. "You can see rates increase a month or two before the Fed actually increases (the federal funds rate). Now is the time to act."