The record-low mortgage rates we’ve grown accustomed to could very well see their end in the coming months, according to the Mortgage Bankers Association. The association released an economic forecast on Tuesday predicting that mortgage interest rates will begin to rise as soon as 2011.
Rates to Move Back Toward 5 Percent in 2011
While we saw rates inch their way up last week for the first time in five weeks, they were still sitting at an extremely low 4.21 percent for the 30-year fixed.
For several months, we’ve seen rates rest below 5 percent, which was once known as the ultimate low mortgage rate. Now the MBA says we can expect rates to slowly move toward 5 percent again, but it will take some time. While rates are expected to increase to around 4.7 percent in the first quarter of 2011, the association doesn’t expect the rate to hit the 5 percent mark again until the end of the year.
What Will Stimulate Growth?
According to the Fed, it could require more policy actions to stimulate significant growth. Purchasing additional Treasury securities could help, although some argue the market has already been priced into the current rates.
Jay Brinkman, one of the MBA’s chief economists, believes the number of mortgages taken out next year will increase to about the same level as in 2009. However, refinancing is expected to drop because as rates creep up, most homeowners will not be willing to take on a higher rate for their homes.
Will You Buy a Home?
The MBA predicted home sales will increase some in 2011 even though there will be no home buyer tax credit to lean on. If you’re a person who has been thinking about buying, before you get started, it’s good to consider the top three things you should do before buying a home.
Punch the home loan terms into a mortgage calculator to see what you’re paying each month. You might also ask yourself if it would be better to rent. This way, you won’t feel completely surprised by the process and can feel comfortable with the choices you must make before even getting started.
