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Will rates rise, fall or remain relatively unchanged? Experts and Bankrate analysts provide their insights.

This week (Jan. 8 – Jan. 14) the experts say: Rates are likely to head lower. This week, a plurality of the panelists believe mortgage rates will fall over the next 35 to 45 days. One-third think rates will rise, and the rest believe rates will remain relatively unchanged (plus or minus 2 basis points).

Experts’ comments and Bankrate analysts
Experts’ comments Panel
As the Fed begins buying massive quantities of mortgage bonds, demand for them as a quality investment is increasing and liquidity is being enhanced. Investors with cash parked on the sidelines are starting to part with it and purchase mortgage bonds. Remember, as demand for bonds increases, interest rates decrease. We are now at all-time lows for interest rates, and it is an incredible time to be taking advantage of them.
David Kuiper, mortgage planner, First Place Bank, Holland, Mich.
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Rates are excellent — in the mid-4 percent range — right now. President-elect (Barack) Obama’s team should get schooled on streamlined rate reduction refinances for conventional loans through Fannie Mae and Freddie Mac. FHA has allowed refinances without appraisals for an eternity. One out of every six borrowers is under water on property value.
Jeff Lazerson, president, Mortgage Grader, Laguna Niguel, Calif.
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Despite mortgage spreads starting to widen again to more than 140 basis points (FNMA current coupon vs. National Average Note Rate), I expect note rates will not cave and decline any further as the market is indicating. With further fiscal stimulus packages being discussed, expect a mortgage market rally (including lower rates) to result in thin trading in lower coupon supply products, meaning more market volatility in pricing. We expect trading to remain in a range between 5 (percent) and 5.5 percent (current note rate average at 5.33 percent, 30-year fixed-rate mortgage).
Cameron Findlay, chief economist, LendingTree.com, Charlotte, N.C.
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I think we are at the bottom. Rates should stay flat for the next two months.
Bob Moulton, president, Americana Mortgage, Manhasset, N.Y.
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(Rates will be) lower as Fed buys mortgage bonds.
Barry Habib, CEO, Mortgage Market Guide, Holmdel, N.J.
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As I indicated last week, economic news combined with the Fed buying mortgage-backed securities would work to drive rates down. This has already started and rates improved immediately this week. For anyone though that believes following the 10-year Treasury is an indicator of where mortgage rates are going, they would be missing the boat here, as the 10-year is up a lot while mortgage rates are down. Although rates should go lower, we saw something interesting this week. As rates dropped and application volume surged this week, many lenders increased rates to throttle volume as their capacity to handle volume has been impacted. Interesting times indeed.
Jim Sahnger, mortgage consultant, Palm Beach Financial Network, Stuart, Fla.
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Despite the Fed’s best efforts, Fannie Mae roadblocks with new, higher fees.
Dan Green, Mobium Mortgage, author of TheMortgageReports.com, Cincinnati
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In normal times, mortgage rates should move in harmony with the 10-year Treasury. Lately the correlation is nonexistent. Treasury prices over the past month have seen changes in less than a week, which usually take months to cycle. We see gigantic volatility in Treasury prices without any corresponding causes. We see zero correlation between mortgage rates and Treasuries. I will still bet that the Fed will continue to buy FNMA/FHLMC paper and drive conforming rates down. Two other points: The relationship between the “old” conforming rates and jumbo-conforming varies wildly from week to week and jumbo is still illiquid with insane (greater than 8 percent) rates.
Dick Lepre, senior loan officer, Residential Pacific Mortgage, San Francisco
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Bankrate’s analysts Panel
Mortgage are near historic lows. At the same time, Treasury yields are rising. One of those things has to change. Guess which.
Holden Lewis, senior reporter, Bankrate.com
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The Fed has pushed mortgage rates still lower by beginning to pump money into mortgage-backed securities. But keep an eye on Treasury yields as any increase from these ultra-low levels could counteract some of the Fed’s efforts.
Greg McBride, CFA, senior financial analyst, Bankrate.com
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About the Bankrate.com Rate Trend Index
Bankrate.com surveys experts in the banking and mortgage fields to see if they believe certificate of deposit and mortgage rates will rise, fall or remain relatively unchanged. For the deposit index, the panel comprises banks, thrifts and credit unions that directly offer FDIC-insured certificates of deposit to the end consumer. For the mortgage index, the panel comprises mortgage bankers, mortgage brokers and other industry experts who provide residential first mortgages to consumers. Results from Bankrate.com’s CD Rate Trend Index will be released monthly. Results from Bankrate.com’s Mortgage Rate Trend Index will be released each Thursday.