Interest Rates UP, UP and Away!!
Reference from Steve Harney Blog
NEWS UPDATE: In 4 weeks rates have increased from 4.71 to 5.14
The government has been keeping interest rates down for over a year. The programs that they used to accomplish this will be coming to an end on March 30, 2010. Rates are expected to rise quickly and dramatically after that.
Here is what the experts are predicting:
Broadly, we expect interest rates to be lowest in the early part of the year, as support programs remain fully in force, with 30-year fixed-rate mortgages hanging around the 5% mark during the first quarter. After that we’ll start a transitional period, and for planning purposes, borrowers should expect figures one-half to even a full percentage point higher than this. ..With continued economic healing expected, pressure will build for the Fed to list rates and/or begin to remove supports, and, absent any resumption of these programs, rates will nudge closer to 6% than 5% for the final two quarters of 2010.
“If you told me by the end of 2010 a 30-year rate was at 6 percent that sounds about right” says Mark Zandi, chief economist at Moody’s. “I don’t think there’s any question rates are headed up.”
“The ending of the Fed program will definitely affect rates,” says Mark Goldman, professor of real estate at San Diego State University. “So far, the Fed has not expressed interest in keeping the program going. That could raise rates by some 150-200 basis points.” (which equates to 6 ½ to 7% rates).
Washington Post article 12/26/09 (http://www.washingtonpost.com/wp-dyn/content/article/2009/12/25/AR2009122501652.html)
After hitting an all-time low in early December, the average rate on a 30-year, fixed-rate mortgage rose to 5.05 percent this week and could climb to 6 percent by the end of 2010, if not sooner, according to giant mortgage financier Freddie Mac.
The experts are saying rates will be somewhere between 6-8% by the end of 2010. This is why, even though prices are still receding, a person should consider buying now instead of waiting and trying to time the bottom of the housing market.