Mortgage Interest Rates: What to Expect Moving Forward. Unprecedentedly low mortgage interest rates have been with us for some time now. Currently at about 3.3 percent, conventional mortgages interest rates are half of the recent historical average of seven percent.
The question on the minds of many people is “What is going to happen to mortgage interest rates in the future?”. We looked at the forecast of various housing experts, including Fannie Mae, Freddie Mac, Wells Fargo, Moody’s Analytics, National Association of Realtors (NAR), Mortgage Bankers Association of America (MBAA).
In general, the first quarter of 2013 lined up at 3.5 percent rate on a conventional 30-year mortgage. Going forward, some expect the rates to rise more quickly than others. For the second quarter of 2013, the consensus is that rates will increase to 3.6 percent. The rate is expected to continue increasing throughout this year and beyond. The year is projected to end above four percent,though some forcasts, such as Freddie Mac, expect the rate to stay at 3.8 percent. Moody’s forecasters believe the rate will start increasing at a faster pace pace than what other experts believe, and foresee the rate at 4.4 percent by the end of 2013. Next year will continue putting pressure on interest rates with mortgage interest rates projected to increase to 4.6, or 5.5 percent-as forcasted by Moodys. Both NAR and Freddie Mac anticipates rate close to five percent even by the beginning of 2014.
However, what does a rate increase from 3.5 percent to 4.6 percent mean in terms of monthly mortgage expense? It means that the mortgage payment on a home priced at $350,000, excluding taxes and insurance, will increase from $1,660 per month to $1,838.