Interest Rates On The Rise?

By | November 8, 2010

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As interest rates have plunged to record lows over the past year, there’s been a lot of speculation about where rates are headed and when they’ll rise again.  Heading into 2010, many experts believed that rates would shoot up as the Fed backed out of buying mortgage-backed securities; the opposite turned out to be true when rates instead continued to fall in response to the economic climate.

This week, the Mortgage Broker’s Association (MBA) released their projections for interest rates over the next several quarters.  They seem to be in line with the National Association of Realtors® forecast, and although rates are forecast to remain low, both organizations are expecting rates to rise at least a point over the next 18 months.

Anticipated Interest Rates: Next Seven Quarters

Anticipated Mortgage RatesAnticipated Mortgage Rates, Next Seven Quarters

What Does This Mean For Buyers?

Right now, home prices have been extremely stable over the last 15+ months.  If prices remain steady but interest rates rise, it means that purchasing the same home a year from now will cost about $60 more per month over the life of the loan – a difference of over $20,000 over the life of the loan.

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