Consumers, mortgage lenders and real estate professionals are all wondering what will happen to interest rates now that the Tax Credit is expiring. Earlier this year many financial types said interest rates will definitely rise in the second half of 2010. So far this year the interest rates have been hovering around 5%, so will interest rates rise, and if so, how high will they go?
According to Ken Rosen, chair of the University of California Fisher Center for Real Estate, by keeping rates so low, “We are encouraging asset bubbles in the stock market, bond markets, and global real estate,” Rosen says. This Inman News article states interest rates will rise for the next 10 consecutive quarters and will be at an average of 5.8% by the 4Q of 2010.
Here is a very informative spreadsheet from the Mortgage Bankers Association showing the predicted rise in interest over the next 2 years. Spoiler alert - by 4Q of 2012 30-year fixed interest rates are predicted to be around 6.6%. Yikes!
So if you've been sitting on the fence, whether to refinance or buy a home, it might be time to jump off that fence and take advantage of the low interest rates while there's still time.