No one can be certain when predicting the future but mortgage rate analysts are expecting mortgage rates to climb in 2014.
In their latest forecast, the Mortgage Bankers Association (MBA) predicts that the 30year fixed rate will reach 4.8 percent by the second quarter of 2014. The MBA further estimates that the mortgage rate will reach 5 percent during the third quarter. This will mark the first time interest rates have hit 5 percent since 2010.
What is causing the rise in rates?
Those knowledgeable in the industry point to the gradual reduction of the Federal government’s bond purchasing program as being one of the key reasons for the increase in mortgage rates. The program once accounted for $85 billion in purchases each month but has now scaled back to $75 billion a month. It is predicted that interest rates will climb as the purchasing program is continually scaled back. The program is expected to end sometime this year.
What does all of this mean for home buyers?
While these forecasts are dependent upon the continued downsizing of the bond purchasing program and the strengthening of the economy, it is expected that investors will find the best mortgage rates available early in the year.
The home loan market will shift from refinancing loans to purchase loans. Freddie Mac predicts this year will be the first
“purchase dominated market” since 2000.
Many may be tempted to wait until the busy summer home buying season, but the best mortgage buys will likely take
place early in the year before rates climb.