Mortgage Rate Predictions For April 2015 (FHA, VA, USDA & Conv)

According to Freddie Mac's weekly mortgage rate survey of more than one hundred banks, 30-year mortgage rates averaged 3.68% last week, marking the 19th straight week of sub-4 percent rates; and the 15-year fixed rate mortgage rate averaged 2.97%.

With conventional mortgage interest rates near 24-month lows, today's home buyers can afford close to 11% "more home" as compared to the start of last year. This means that if you could afford a $400,000 home last year, this year, you can afford a home for $444,000.

It's an excellent time to be a home buyer. Plus, millions of U.S. homeowners are now "in the money" to refinance. Their mortgage rates are more than 150 basis points (1.5%) above today's rates; and, their loans have more than 10 years remaining with a balance larger than $50,000.

The typical refinancing homeowner is saving more than 30% annually. And, for as low as conventional mortgage rates are, VA and FHA mortgage rates are even lower.

A recent reduction in FHA MIP costs has lowered effective FHA mortgage rates to their lowest in history; and VA loan interest rates routinely beat FHA rates by 0.125 percentage points.

Every U.S. homeowner should be exploring their potential savings on a refinance or home purchase. Even if you've already refinanced or recently purchase, take a second look at today's low rates.

30-Year Mortgage Rates Average 3.68%

The average conventional 30-year fixed rate mortgage is 3.68%. The rate is available to "prime" borrowers paying an accompanying 0.6 discount points at closing.

Discount points are a one-time loan cost, where one discount point carries a cost equal to one percent of your first mortgage loan size amount. For example, 1 discount point on a Denver, Colorado loan at the 2015 conforming loan limit of $417,000 would carry a cost of $4,170 to be paid at closing.

Discount points, which are typically tax-deductible, can be paid with cash or they can be added to your loan size for you.

Meanwhile, 15-year mortgage rates are low, too. Borrowers looking for a 15-year mortgage now get an average rate of 2.97% with 0.6 discount points due at closing.

Note that Freddie Mac's weekly mortgage interest rate survey applies to conforming loans and conventional mortgage rates only. FHA mortgage rates and VA mortgage rates are not surveyed as part of the report; nor are mortgage rates for USDA loans.

Mortgage rates for FHA, VA and USDA loans are also near two-year bests which is making it decidedly easier to qualify for an FHA Streamline Refinance, a VA Streamline Refinance, and a USDA Streamline Refinance, respectively.

Mortgage Rates In April

Mortgage rates rates are holding below the psychologically-important 4 percent figure. When 2015 began, 30-year mortgage rates averaged 3.87%. Today, rates average 3.68%.

Loans now cost $459 monthly for every $100,000 borrowed with escrows for taxes and insurance; and applicable private mortgage insurance costs extra.

For rate shoppers, it should be noted that mortgage-backed securities (MBS) -- the securities which are the basis for U.S. mortgage rates -- have failed to find a "range" this year. MBS pricing continues to improve, on the whole, which has led consumer rates down.

There are a number of factors, though, which could affect this month's mortgage rates.

More Jobs In The Economy

Last month, the February Non-Farm Payrolls report showed 295,000 net new jobs added to the economy, and revisions to prior months' reports raised last year's total to 3.09 million jobs added to the economy overall.

For thirteen straight months, job growth has topped 200,000, and more than 10.8 million jobs have been added to the economy dating back to 2010.

Wage growth is finally improving, too, as the jobs market returns. Unemployment rates are the lowest since mid-2008 and the combination of market forces and minimum wage laws have shifted employee wages up.

Rising wages can be an inflationary force on the economy and inflation is linked to rising mortgage rates. As the jobs market expands, expect the Fed to play a lesser role in holding today's mortgage rates down.

A Drop In Inflation Rates

The Federal Reserve also watches inflation rates. As inflation rates rise, the Fed is more inclined to remove or slow its market stimulus, which can cause mortgage rates to rise.

Inflation is the enemy of low mortgage rates. This is because inflation devalues the U.S. dollar which, in turn, devalues dollar-denominated U.S. mortgage bonds.

Since 2012, though, inflation rates have been stable and well below the Federal Reserve's target rate of two percent. When inflation rates run too low for too long, disinflation can occur.

To avoid disinflation, Fed has taken steps since 2009 to stimulate the economy but, thus far, those efforts have yet to manifest throughout the economy fully. And now, with oil prices low, some fear that Cost of Living indices will begin to show price drops.

The Fed acknowledges low inflation rates as a near-term issue, but believes that inflation rates will return to more "stable" rates in the coming months.

Expect a push-pull on inflation/disinflation forces throughout April and May and into the summer months. Rising inflation rates will send mortgage rates up. Falling inflation rates will lead mortgage rates down.

A Strong U.S. Dollar Helps Mortgage Rates Drop

In general, as global economic weaken, U.S. mortgage rates improve. This is the result of an investing pattern known as a flight-to-quality.

"Flight-to-Quality" describes, during periods of economic or political uncertainty, the flow of money from risky assets toward safe ones. Investors seek safe assets to protect their principal investments, and to shield against loss.

Mortgage bonds are among the safest investment classes in the world. Therefore, 30-year mortgage rates tend to improve when war is imminent; or, when large global economies face an uncertain future.

Investment in the U.S. dollar has been strong, too, which helps mortgage interest rates to drop.

This is because mortgage rates are based on the price of mortgage-backed securities (MBS), which are priced in U.S. dollars. As the value of the dollar rises, so does the inherent value of owning MBS. This drives demand for mortgage bonds higher which leads prices up.

This is another reason mortgage rates have moved lower this year so far -- there was a fair amount of global uncertainty -- and Greece is threatening to end its austerity measures in opposition to debt agreements dating to earlier this decade.

In April, expect the U.S. dollar to be more tightly linked to rates; and watch for the Greece story to ignite a run on MBS, similar to what happened in 2011 and also in 2012.

Mortgage Rate Predictions From The Experts

Each week, The Mortgage Reports hosts an interactive, mortgage-rate guessing game called The Mortgage Rate Game.

In it, real estate agents, mortgage loan officers, journalists, consumers, and Wall Street pros compete for the title of "Best Mortgage Rate Forecaster" in the land.

The current leader is Chicago-based Joe Caltabiano with Guaranteed Rate. Joe is a lock to win the Q1 2015 forecasting title, but other players have scored well, too, including Rob Mildish with Northpoint Mortgage, Sean Young with First Cal, and John Glynn with Lasalle Financial.

The Mortgage Rate Game is free to play and all readers are welcome to challenge for First Place. Sign up at The Mortgage Rate Game page, and get your first vote tallied.

This Week's Economic Calendar

This week, the U.S. economic calendar is thick, including Friday's release of the Non-Farm Payrolls report. Except that Friday is Good Friday and Passover and the markets are closed.

The jobs report will be released but trading on the news won't begin until the market re-opens next Monday. This could throw markets for a fit, as it did in 1994 in a similar scenario.

Note that there are a bevy of Federal Reserve members scheduled to speak this week. The markets will watch these speeches for clues about future Fed policy. The rhetoric of Fed speakers may cause mortgage rates to change.

Mortgage interest rates can change quickly, and without notice. It's a good, safe time to lock a low rate. Today's mortgage rates may not last.

Get A Complimentary Rate Quote

Mortgage rates are near two-year lows. Home buyers have their greatest purchasing power of the year; and refinancing households are saving more money.

Get a complimentary mortgage rate quote and see what rates for which you're eligible. Rate quotes are available at no cost, with no social security number required to get started, and no obligation to proceed.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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