According to recent report from BofA Merrill Lynch, the sharp drop in oil prices could keep mortgage rates low and even force them to drop to as low as 3.25%. A level that analysts said could “get housing back to affordable levels for many,” as oil prices decline.
The National Association of Realtors recently predicted
the 30-year fixed-rate mortgage will reach 5% by the end of 2015. (It's currently averaging 3.89%, according to Freddie Mac).
Crude oil hit a five-year low close to $60 a barrel on Monday, according to Reuters.
Oil prices have collapsed over the last six months as high-quality, light crude from North America has overwhelmed demand at a time of lackluster global economic growth.
The quick decline of crude oil prices could affect more than mortgage rates. Oil-producing states have created high-paying jobs, which has spurred home buying and thriving local economies. The decline in oil demand could lead to a layoffs and more unemployment in these oil communities, according to .
While many economists are predicting a rise in mortgage rates in 2015, Bank of America Merrill Lynch analysts are forecasting differently.