Mortgage Rate Predictions for 2013 - Will mortgage rates continue to hover near record-lows in 2013, or can buyers expect to see an increase as the year progresses? According to a mortgage lenders, economists, and financial journalists, the lowest interest rates may be in our rear view mirror. In fact, most agreed that mortgage rates will continue rise slightly each month, meaning it'll cost more to buy a home in 2013 than it would have to purchase the same home in 2012. So, if you trust the experts, now is the time to apply for a new mortgage or refinance your existing one!
But what exactly did they say?
Dean Baker, the co-director of the Center for Economic and Policy Research (CEPR), is willing to put a firm number on his prediction. In a press release, he stated, “I would expect mortgage interest rates to gradually edge up over the course of 2013 so that they are around 3.8 percent by the end of the year.” Because of that prediction, he encouraged anyone considering a refinance or new mortgage to act now, while rates are still several tenths of a point lower.
Jay Brinkmann, the chief economist at the Mortgage Bankers Association (MBA) actually thinks Baker's estimates are low, as his organization sees the interest rate climbing even higher by the end of this year. Said Brinkman in a press release, “The Mortgage Bankers Association's final forecast of 2012 predicts that the 30-year fixed-rate mortgage will average 3.9% in the first quarter of 2013, then gradually rise with an average rate of 4.4 percent in the final three months of the year.”
The MBA also estimates that by mid-year, the Federal Reserve will be buying 36% of all mortgages originated in 2013 as part of the central bank's Quantitative Easing program. They expect that percentage to rise to 50% of all originated mortgages by the end of the year.
Polyana da Costa, a financial journalist, also believes that the interest rate will remain under 4%, at least until the middle of the year. In fact, she believes mortgage rates will only increase if the Federal Reserve decides to end Quantitative Easing. That’s a possibility, though, that has been the target of speculation over the past week.
Holden Lewis, another financial journalist, believes that mortgage rates are going to rise throughout the year because America’s economy is going to get healthier. But, he's quick to point out that he's been wrong the last four years, when he also thought rates would increase, but plummeted instead. This year, however, he thinks he’s right because, as he puts it, “it’s hard to believe that they could go lower.”
And finally, Dick Lepre, a senior loan officer at RPM Mortgage, went a different route, saying that international finance matters will affect our mortgage rates the most in 2013. “What we have is fiscal policy in the EU, Japan and the U.S. all being seriously mismanaged. What will affect interest rates in 2013 is the market perception as to which of these is the best of the bad,” said Lepre.
So, what do all of these predictions really mean?
If you read all of these opinions collectively, you'll see that many factors affect the economy, the housing market, and the interest rate. While no one can predict the future, all of these mortgage experts do agree on one thing – 2012 was a year where interest rates hit all-time lows, and now that the economy is starting to recover, those rates will increase in 2013. By how much? Only time will tell!
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