Crystal Ball: Interest Rates Will Increase Significantly in 2014

 The smart folks in the KCM Crew are at it again - offering smart forecasts and advice on all things real estate. They are often correct, so I am passing their views along to you:

Most experts are calling for an increase in mortgage interest rates in 2014. However, we believe the increase will be more dramatic than is being projected. We believe rates will be closer to 6% than 5% by year’s end.
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. This should come as no surprise as the KCM Blog has been warning of this likelihood over the last several months.

Above are the most recent projections of where rates will be at the end of 2014 by the four major agencies. However, we believe that the government is not afraid to shoot right past these levels.
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, we feel that rates will be in the 5.75-6% range by year’s end.
SOURCE: KCM.COM

If you are curious about the value of your own home in today's market, contact me for a free, confidential Market Analysis. I'm happy to help you with all your Real Estate needs. Vicky Germaise, Licensed Salesperson, Douglas Elliman Real Estate. 631.298.6146