February Mortgage Rate Predictions


Mortgage rate continue to defy all predictions.  You may remember me warning that rates would most definitely start rising in the beginning of 2015.  The opposite proved to be true.


At the beginning of January 30 year rates were averaging at 3.875%.  we ended the month at 3.65%.  These are near 24 month lows and it has been boosting buyer purchasing power and allowing millions of homeowners to refinance and get significant monthly savings in the process.  VA and FHA rates are even lower.  Every U.S. homeowner should be exploring the potential refinance savings, even if a home purchase or refinance was done recently.  There is no harm in picking up the phone and calling a mortgage loan officer to see if you can take advantage of these current low mortgage interest rates.


How we got to these low rates and what direction they are going include three main factors: Jobs, Inflation, and a Strong US Dollar


At the beginning of every month the Non-Farm Payrolls reports come out indicating how many new jobs have been added.  In October of 2009 our unemployment rate was at 10.0%.  We closed out 2014 with unemployment at 5.6%.  Normally this would indicate a rise in mortgage interest rates but a key factor in job growth is still missing: rising wages.  We are still waiting to see wage increases in the job market which will be a big indicator that our economy is significantly recovering.  If January and February reports indicate wage increases this could bring a rise in interest rates.


Inflation is the enemy of low mortgage rates.  Inflation devalues the US dollar and in turn US mortgage bonds.  When there is inflation in our economy, rates tend to rise.  The Fed took steps to stimulate the economy and keep inflation stable (Quantitative Easing or QE).  Now that QE has ended inflation should rise but in a stable fashion (slowly).


Our economy is connected with the global market and what happens overseas effects the US, especially the bond market (mortgage rates).  Weakness in non-US economies effects mortgage rates in a positive way.  during periods of economic or political uncertainty money flows from risky assets towards safe ones.  Investors seek safety to protect their investments.  Mortgage bonds are among the safest investment in the world.  As a result when global economies face uncertainty or imminent war, rates tend to improve.  We have seen the value of the dollar improve over the last few months with increasing political and economic issue in Europe.  All positive forces for low interest rates.


Mortgage interest rates can change quickly and without notice.  It is a good, safe time to lock now with today's low rates as they may not last.



Christina Perry

Mortgage Consultant

Trident Mortgage Company
109 34th Street
Ocean City, NJ  08226

609-464-0829 Mobile

610-650-5339 Fax