Saturday, January 5, 2013
Will Mortgage Rates Go Up Again Soon?
Mortgage interest rates are expected to rise this year, and the increase will likely curb refinancings and affect move-up home buyers.
The Mortgage Bankers Association projects the 30-year fixed rate to increase to an average of 4.1 percent in 2013 and 4.5 percent in 2014, up from 3.7 percent last quarter. The group's December forecast has the dollar value of refis dropping to $818 billion this year and $350 billion next year, from approximately $1.2 trillion in 2012.
Neither higher interest rates nor fewer refis are expected to have a significant impact on housing starts or home sales, however. "Interest rates are so low right now that a modest increase wouldn't have much effect on sales," according to Walter Molony of the National Association of REALTORS®.
What would be a game changer, he adds, is a loosening of credit standards — especially considering that so many borrowers still cannot qualify for financing. "A return to normal standards would boost sales 10 percent to 15 percent," Molony estimates.
Source: "Mortgage Rates About to Lift?" Investor's Business Daily (Jan. 4, 2013)