Mortgage rates will likely rise
above 5 percent in 2014 and average 5.3 percent by the end of 2015,
according to the Mortgage Bankers Association’s forecast.
That would mark a big jump over where mortgage rates stand now. The
MBA reported this week that the 30-year fixed-rate mortgage averaged
4.33 percent, the lowest average since June.
The MBA expects that the Federal Reserve will decide to taper its
$85-billion per month bond-purchasing program in early 2014 and end it
altogether in September 2014. The Fed’s bond buying program has been
keeping mortgage rates low. The Fed has hinted in recent months that it
will soon be winding down the program.
The MBA said in its forecast that it expects home purchase
applications for mortgages to rise 9 percent next year, following
expected continued home sales and price increases.
“We are projecting home purchase originations will increase in 2014
due largely to gains in home sales and home prices,” says Brinkmann. “We
expect to see a decline in the share of sales paid for with cash, and
higher average LTVs on purchase mortgages, due to the rise in home
prices.”
Source: “U.S. Mortgage Applications Increase as Rates Edge Down,” Reuters (Oct. 30 2013) and “Purchase Loans Expected to Buck Rising Mortgage Rates Next Year,” Inman News (Oct. 29, 2013)