Mclean, Va.–Freddie Mac has released its U.S. Economic and Housing Market Outlook for August, showing that despite the recent ups and downs in the capital markets the likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market’s recovery as it continues to struggle.
“While the capital markets have experienced sizeable movements up and down in recent weeks, these swings are unlikely to lead to whiplash or hospitalization for individual investors. Heightened uncertainty, unfortunately, can be harmful to the overall economy,” says Frank Nothaft, vice president and chief economist at Freddie Mac.
Report highlights include:
- Employment was up 117,000, the best showing since April, and the unemployment rate edged down a tenth to 9.1 percent.
- Over the first half of 2011, growth was figured to be about 0.8 percent at an annual rate.
- Compared with the first quarter of 2008, borrowers are paying about $130 billion less in mortgage interest today, at an annual rate.
- Interest rates on 15-year fixed-rate loans reached about 3.5 percent in early August.
- Freddie Mac House Price Index for the U.S. shows that prices are down 25 percent, on average, as of June 2011 compared with their peak obtained five years ago.