Will Mortgage Rates Hit 4 Percent This Year?

• May 23, 2013

by Shilpi Paul

After hovering around record lows for a long period, are mortgage rates headed back towards 4 percent? Several experts think so.

On Thursday morning, Freddie Mac reported 3.59 percent with an average 0.7 point as the average on a 30-year fixed-rate mortgage. Over the last few weeks, rates have been moving steadily north. Last week, rates averaged 3.51 percent; the week before, they were at 3.42 percent and the week before that, 3.35 percent.

In a post earlier this week, The KCM blog reported that three major outlets — the Mortgage Bankers Association, Fannie Mae, and the National Association of Realtors — all project that mortgage rates will be at 4 percent by the end of the year.

Here in the area, Kevin Connelly of Branch Banking & Trust posited in our article “5 Predictions For the Spring Market“ that mortgage rates could get as high as 4.4 percent by the end of 2013.

“The uncertainty created by sequestration and the recent rally in the stock market have counteracted the Federal Reserve’s ongoing stimulus policy attempting to keep rates low. This policy, “Quantitative Easing” or QE, involves the Fed’s active participation in purchasing mortgage bonds in the secondary market to artificially hold long term rates down. Eventually it will cease its bond buying spree and the fear is that rates will jump in reaction,” noted Connelly.

This article originally published at http://dc.urbanturf.com/articles/blog/mortgage_rates_rise_will_they_hit_4_percent_this_year/7107