With all the turmoil in the market it's hard to believe that rates on 30 year fixed mortgages are basically right where they were 12 months ago, but it is true. Rates are currently at 6.33% (6.584 APR), only slightly higher than the 6.25% (6.402 APR) we saw in October of 2006.
Of course, six months ago we saw rates dip to 6.125% (6.276 APR); and in August, at the peak of the credit crisis, rates were 6.75% (6.907 APR). But as the markets begin to equalize, once again we see what a great time this is for potential homebuyers.
In the next 12 months, I believe the weak dollar and some continued foreclosure growth in pockets of the country will play the biggest roles in affecting mortgage rates. Until the dollar strengthens, global investors will put their money in stocks rather than mortgage bonds, so I don't expect a big drop in mortgage rates until increased demand for our currently inexpensive exports reverses the current low demand for the dollar.