Thirty year mortgage rates are still hovering close to the 4.5% level. There is speculation that rates will increase. However, recent developments point to a stable interest rate level over the intermediate and long term.
Nationally, the average home sells for $417,000. A loan written for a home selling above this figure is known as a "jumbo loan". Loans for properties selling below this figure we will call average loans. This year, jumbo loan rates have been trending lower than average loan rates. As these jumbo loans are not handled by Freddie Mac or Fannie Mae, such loans are written by banks or lending institutions exclusively.
Due to previously unheard of increases in the prices of existing homes, there are an unprecedented number jumbo loans now being written. This has led to serious competition between lenders to write these loans. This, naturally, has led to lower interest rates for jumbo loans. In fact, the going rate for a jumbo loan is substantially lower than the rates for the so called average loan.
The ever increasing home values we see are pushing more and more homes into the jumbo category. This fuels even more competition and even lower rates. Over the long term, there are no signs pointing to a lowering of existing home values. Hence, over the long term, we will see continued price increases, and continued interest rates at or below the 4.5% level.