Predictions for 2014: Interest Rates Will Increase Significantly

  • Megan Douglas
  • 01/11/14

Predictions for 2014: Interest Rates Will Increase Significantly

Most experts are calling for an increase in mortgage interest rates in 2014. However, there is some speculation that the increase will be more dramatic than is being projected. Noting that rates will be closer to 6% than 5% by year’s end. Historically, this is not a high interest rate.  In fact, compared to the 20%+ interest rate from the 80’s this is still considered inexpensive money.  But, for Buyers who have been considering a purchase with current rates, this may come as a surprise later this summer when they can buy less house than the currently low rates allow.
The Fed announced last month that they would be pulling back some of their stimulus package which has helped the housing market by keeping long term mortgage rates at historic lows for the last few years.
Above are the most recent projections of where rates will be at the end of 2014 by the four major agencies.  Doug Duncan, chief economist for Fannie Mae, this past summer announced: “I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.
And Frank Nothaft, Freddie Mac VP and chief economist, at virtually the same time explained: “As the economy continues to improve, we expect to see continued upward movement in long-term interest rates… At today’s house prices and income levels, mortgage rates would have to be nearly 7 percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.”
Only time will tell. However, rates are predicted to rise which is just another reason to start looking for your next home early this year before the rates begin ticking upwards.
If you’re ready to start looking for your next Denver home, please contact me.



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