Economists Predict Little Rise in Rates: Loans at Around 7% Likely for Buyers
While the recent upward tick in mortgage interest rates may indicate an end to historically low numbers, economic forecasters are predicting rates will rise very little in the near future.</br></br>Rates began rising in mid-September. For the week ended Sept. 16, the Federal Home Loan Mortgage Corp. (Freddie Mac) reported a national average interest rate of 6.96 percent for 30-year loans, up from a 25-year low of 6.82 percent. The increase was the first in seven weeks.</br></br>Several housing economists attributed the Sept. 16 rise to the government's release that day of the consumer price index (CPI), which reported a 0.3 percent increase. Price increases are a sign of inflation and interest rates rise in inflationary times.</br></br>ÛÏAll the [previous] economic releases were suggesting weak economic growth and relatively tame inflation. That combination exerted downward pressure on interest rates,Û said David Lereah, chief economist of the Mortgage Bankers Association of America.</br></br>ÛÏIn my opinion they came down too far and as soon as there was a bit of bad information, which was the [CPI] report, it gave an excuse for bond traders to take profits and exerted upward pressure on rates. The mood of the bond market has changed ever since."