How High Will Mortgage Rates Go in 2010?
Just how high rates will go, however, and when they’ll start to move, isn’t yet clear. Lawrence Yun, chief economist for the National Association of Realtors (NAR), says 30-year fixed rates are “rock bottom” and simply cannot stay at 5 percent. That much, economists, analysts, and the Fed all agree on. But just how high they’ll get is another question.
Fed Vice Chairman Donald Kohn
told a conference last month that any increase in rates is likely to be “modest” but added “that judgment is subject to considerable uncertainty.” Yun believes 30-year fixed rates will probably end up jumping to about 5.7 percent by year’s end. Freddie Mac, which issues many of the MBS being bought by the Fed, said in late December that
rates would hit 6 percent by the end of 2010, sending a shock through the market. But Amy Crews Cutts, Freddie’s deputy chief economist, now foresees a rate increase more in line with Yun’s prediction, saying that any upward pressure on rates will likely be offset by a dropoff in demand. Bill Gross, head of Pimco, one of the largest and earliest private investors in mortgage-backed securities, believes that due to a rising interest rate environment in general, mortgage rates could settle anywhere between 6 to 6.5 percent, but admits at this point he’s simply making an educated guess.
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