Freddie Mac Says Rates Likely to Reach 5 Percent by End of 2015

• November 18, 2014

by Lark Turner

Freddie Mac predicts that interest rates will rebound to 5 percent by the end of 2015, according to its latest housing outlook report.

In addition to rising interest rates, the report predicts a market that will see slightly higher home prices, decreasing affordability and a quickening sales pace — the best in eight years — in 2015.

In a news release, Frank Nothaft, Freddie Mac’s chief economist, attributed the positive outlook to continued economic growth.

“The good news for 2015 is that the U.S. economy appears well poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better,” he said. “There are several reasons for the better macroeconomic performance. Governmental fiscal drag has turned into fiscal stimulus, lower energy costs support consumer spending and business investment, further easing of credit conditions for business and real estate lending support commerce and development, and more upbeat consumer and business confidence, all of which portend faster economic growth in 2015. And with that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity.”

Freddie Mac is not the only outlet predicting rising interest rates next year, as NAR chief economist Lawrence Yun noted that he expects rates to rise to 5 percent as well. However, in 2013, Freddie also predicted rates would rise to 5 percent by the end of this year, so feel free to take that prediction with a grain of salt.

This article originally published at http://dc.urbanturf.com/articles/blog/freddie_mac_says_rates_likely_to_reach_5_percent_by_end_of_2015/9232