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Where Are Interest Rates Really Headed?

Almost every mortgage expert predicted that interest rates would skyrocket earlier this year as the Fed backed out of purchasing mortgage-backed-securities. They were wrong and most have refrained from making any new projections ever since. Last week, our own friend and adviser, Dean Hartman, said they may go lower. This week, Market Watch reported on the Mortgage Brokers’ Association’s (MBA) projections:

Mortgage rates may be as low as they’ll get — rates are on course to rise, slowly moving toward 5% by the end of next year, according to the Mortgage Bankers Association’s economic forecast.

It seems that the MBA is in line with the projections of the National Association of Realtors who also believes that rates will increase over the next several quarters. Here are the comparative projections:

Bottom Line

If you are thinking about buying a home but are waiting for prices to soften further, be careful that the ‘cost’ of the house isn’t heading upward because of  interest rates.

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