30-year fixed-rate mortgage, average in Western U.S. for week ending February1, 2007. Blue line is Freddie Mac forecast made 1/11/2007.
“Interest rates moved higher following the latest upbeat economic news,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The strong 3.5 percent annualized growth in the economy over the final quarter of 2006 occurred while inflation moderated. Solid economic growth and tepid inflation contributed to the Fed’s decision to leave the target short-term interest rate unchanged.
“The Fed indicated in its statement that there are some tentative signs of stabilization that have appeared in the housing market. December’s existing and new home sales confirmed that 2006 was a year of significant decline in housing activities, but 2006 was still in the top three years for total home sales.”
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