Real Estate Predictions for 2014: Interest Rates will Continue to Rise
Most experts are calling for an increase in mortgage interest rates in 2014. However, we think the increase will be more dramatic than is being projected.
The Fed announced last month that they would be pulling back some of their stimulus package which has helped the housing market by keeping long term mortgage rates at historic lows for the last few years.
Above are the most recent projections of where rates will be at the end of 2014 by the four major agencies. However, we believe that the government is not afraid to shoot right past these levels.
Doug Duncan, chief economist for Fannie Mae, this past summer announced:
“I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.”
And Frank Nothaft, Freddie Mac VP and chief economist, at virtually the same time explained:
"As the economy continues to improve, we expect to see continued upward movement in long-term interest rates… At today’s house prices and income levels, mortgage rates would have to be nearly 7 percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.”
Only time will tell. However, rates could be in the 5.75-6% range by year’s end. We encourage potential buyers not to wait to lock in your rates and get your offers in soon. Waiting until the end of the year could cost you thousands.