Interest rates have moved downward this late spring on increasingly poor economic news and inflationary leveling, so much so that the idea of a QE3 (Quantitative Easing 3) has gotten some play. We never say "never", but we're comfortable in saying that it's not going to happen during this forecast period. The downshift in growth probably has a number of facets, including but not limited to interruptions caused to the Japan disaster and our near-historic Mississippi river floods. The next few weeks will probably bring more of an accumulation of poor economic data, but the four or five weeks after that may bring new glimmers of economic life. As such, we should start low and probably end somewhat higher in terms of rates.
For the next nine-week period, we think that the overall average for 30-year fixed-rate mortgages will run in a channel from 4.70% to about 5.10%. For Hybrid 5/1 ARMs, low funding costs and some increased appetite by portfolio lenders will probably serve to move those rates between 3.30% and 3.75%, and for conforming 30-year fixed rates, we see a range of 4.50% to 4.90%