Mortgage rates hit new low, expected to stay low into 2012

Freddie Mac's Primary Mortgage Market Survey found the 30-year fixed-rate mortgage average has dropped again to the record low of 3.94 percent, while the 15-year fixed-mortgage rate declined to an all time low of 3.21 percent.

Frank Nothaft, vice president and chief economic for Freddie Mac, said mortgage rates dropped again in light of negative housing reports from the Federal Reserve and Mortgage Bankers Association. Freddie Mac does not expect the rates to increase in the upcoming year, he added.

Freddie Mac's December 2011 U.S. Economic and Housing Market Outlook predicts mortgage rates will remain low through at least the first six months of 2012, as the number of single-family home loans decline.

The low rates and continued depressed home values are expected to improve housing activity slightly in 2012, but not lead to a complete recovery. The housing market will remain depressed as the U.S. unemployment rate is expected to decline modestly and remain above 8 percent.

"In housing, look for the rental market to lead the way and for some improvement in the single-family space in parts of the country," Nothaft said.

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