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Where are Mortgage Rates Headed?

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Posted by: Claire Belby on Wednesday, December 10, 2014 at 3:00:00 pm

Where are Mortgage Rates Headed?

Mortgage interest rates makes a difference, sometimes a significant difference, in how much home you can afford. Ask anyone who bought their first home in the late 70s and early 1980s and they will tell you the good old days are right now!

Gone are the 15% rates of those days, replaced with a fluctuating 4% to 4.5% of today. Mortgage rates have been in that range all year and have dipped lower at points. Below 4% for a 30-year fixed-rate mortgage and right above 3% for a 15-year fixed-rate mortgage is not uncommon. However, the mantra has been rates will go up in 2015.

So, how does it work?

Generally, when the overall economy is struggling, the Federal Reserve keeps interest rates low to encourage Americans to borrow and stimulate spending. That is exactly what happened after the financial and housing markets took a hit in 2008 and rates have been low ever since.

As the economy slowly improves, rates will rise. Conventional wisdom says expect increases to the 5% range by mid to late 2015. No one has a crystal ball, but stay in touch with your REALTOR® as you look to buy in 2015 for their insights on interest rates and market trends. 

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