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Mortgage Rates To Rise Above 5% in 2014?

November 7th, 2013 · No Comments · Mark Lomas and Kirsten Wolfe, Santa Barbara Real Estate

Look for mortgage rates to rise above 5 percent next year and average 5.5 percent by the end of 2015, according to the latest forecast from the Mortgage Bankers Association.

Illustration of a house made of hundred-dollar billsThose rates are low when compared with historical levels — which averaged 7 to 9 percent in the 1990s and 10 percent in the ’80s – but they are a big jump from today’s mortgage rates, which currently average 4.33 percent for 30-year, fixed-rate loans.

The Federal Reserve’s $85-billion-per-month bond-purchasing program, called Qualitative Easing, has kept mortgage rates low, but the MBA expects the agency to start winding down the program in early 2014 and end it altogether by next September. The Federal Reserve itself has broadly hinted that the program won’t be around for much longer.

The likelihood of significantly higher mortgage rates in the near future should spur potential homebuyers to get their finances in order sooner rather than later. The longer they wait, the higher their mortgage payments will be.

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