Where are mortgage rates heading?

Banks and financial institutions have been making the pitch that mortgage rates are at 40-year lows, and now is the time to finance a new home purchase with debt. But can we be sure that we have hit the bottom?

The following chart shows the 30-year rates that Freddie Mac, the government sponsored entity that sells mortgage- backed securities, has charged since 1980.



As you can see, the rates have been on the decline for almost 30 years now, with small fluctuations in between. Recently, we saw another rise in the mortgage rates, followed by another decline that had lasted to date.

Below is a graph of Boston and National mortgage rates over the past 3 months

It is hard to tell where the rates will go in the long-run. However, in the short to mid term I believe we can expect the mortgage rates to rise from the recent low of 4.5% on a 30-yr mortgage.