Mortgage rates have been hovering near record lows for the past year. In December, the Federal Reserve reiterated its aim to keep interest rates down at least through mid-2013 to help bolster the U.S. economy. Perhaps more important, a lack of confidence in the global economy, the government debt crisis in the European Union (E.U.) and volatile financial markets have prompted investors to continue to seek the relative safety of the treasury, which has pushed down yields.
Though the U.S. economy appears to be expanding moderately, global growth is slowing. Forecasters look for inflation to fall in 2012, which could push down mortgage rates. This would encourage investment and could boost demand for farmland.
The interest rate on 10-year Treasury bonds—a benchmark indicator for mortgage rates—fell below 2% in August 2011, a level last seen in April 1950. The 10-year Treasury bond was yielding 2.07% as of December 9th, under the 2.4% June 30, 2012 projection.