Posted by BoomerSooner on 4/2/13 1:08pm
Msg #464114

Your thoughts on this yahoo story

http://homes.yahoo.com/news/low-mortgage-rates-013524692.html

BLUF: According to the MBA, by the end of 2013, the interest rate on a 30-year fixed mortgage will be at 4.4 percent. And by the end of 2014, they see the rate at 4.6 percent.

What the Future Holds for Interest Rates.

If you're like most people, you probably look forward more than back. So you're likely wondering what the future holds in terms of interest rates.

As of February 28, 2013, interest rates for a 30-year fixed-rate mortgage were at 3.51 percent, according to Freddie Mac. The lowest they've hit historically was 3.38 in December 2012. So we can say that a rate of 3.51 percent isn't so shabby.

Wondering why are the rates so low nowadays? Duffy says that recent moves by the Federal Reserve have held interest rates in check. The government has been artificially suppressing interest rates by essentially buying mortgage loans from the banks - thereby freeing up more money for lenders to then give to borrowers. However, he says government involvement will not last forever, and the rates will start to climb.

In fact, Duffy predicts that "[For] most of 2013, we'll see relatively low interest rates. Maybe not as low as we have today, but certainly in the four percent range, give or take a quarter point."

To see how Duffy's predictions measure up against other rate forecasts out there, we checked the mortgage interest rate projections made by the Mortgage Bankers Association (MBA), the national organization representing the real estate finance industry. And their predictions size up to Duffy's.

That doesn't sound like much, you might say, but if you're financing hundreds of thousands of dollars over 30 years, that interest can really add up. For instance, on a $400,000 fixed-rate mortgage, a mere two-tenths of a percent (the difference between an interest rate of 4.0 and 4.2 percent, for example) costs you an extra $16,400 over the life of the loan.

Reply by jba/fl on 4/2/13 1:17pm
Msg #464116

My thoughts? I wish my crystal ball were as clear. n/m

Reply by Mary_in_VA on 4/2/13 2:21pm
Msg #464120

It has to happen sometime, unless...

we, as a nation, decide that we want the Federal Reserve Bank to be the only lender in the mortgage market, which is, basically, the situation we have now. [The Fed is buying $85 billion in loans every month! (And I've think they've pledged to until or through 2014.) The banks/mortgage companies are, for the most part, just acting as servicers.]

Commercial/consumer banks/lenders do not loan people money at these interest rates for extended periods of time. Over a given 30 year period, the stock market returns an average of 8% per year, obviously with some volatility, which is why, historically, before this last decade of madness, 30-yr. mortgage interests rates averaged around 7% and everybody thought 5.5-6% was great!