Freddie Mac: Rates to Stay Low, Rents May Lead Recovery - | ArmandoMontelongo.com

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Freddie Mac: Rates to Stay Low, Rents May Lead Recovery

Rates for 15- and 30-year fixed-rate mortgages should remain low through at least the middle of next year, the chief economist with Freddie Mac said in a blog post.

Frank Nothaft, the chief economist at the federally chartered agency, also said the rental market appears to be leading a slow recovery in the housing market. Rents have increased in most markets and vacancy rates are down.

In addition, property values have increased for professionally managed multi-family complexes in most neighborhoods.

The Federal Reserve’s Maturity Extension Program, which was designed to keep long-term interest rates low, has pushed the 30-year rate to around 4 percent during the fourth quarter. It will continue to hover in that area for at least the first six months of 2012, Nothaft said.

Lower interest rates and a strong market for rentals both are good signs for real estate investors.

Home builders face strong competition from the large number of existing properties on the market. Freddie Mac expects national home-price indexes to move lower before bottoming out in 2012, with modest appreciation delayed until 2013.

Home value recovery will be varied across the nation, with some markets slowly regaining value. Those markets with higher vacancy rates and greater numbers of distressed sales will continue to struggle.

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