Expect mortgage rates to be higher at the end of 2013 than at the beginning of the year. That's the consensus among mortgage experts whose opinions were solicited at the end of 2012 by Bankrate.com.
Here is what mortgage lenders, economists and Bankrate's journalists had to say when they were asked to predict what will happen to mortgage rates in 2013.
Co-director, Center for Economic and Policy Research, Washington, D.C.
Mortgage banker, WCS Funding Group, Lutherville, Md.
Mortgage rates are already at all-time lows, so it's hard to see them dropping further. The Federal Reserve is doing all it can to keep mortgage rates low by buying $85 billion a month in Treasuries and mortgage-backed securities, so any rise in rates will be muted by their efforts.
I see mortgage rates staying close to where they are now for the first half of 2013 and rising slightly through the remainder of 2013. If, however, the U.S. or global economy falters or the euro debt crisis worsens, there is a chance rates will hit new all-time lows in 2013. I think the risk of higher rates is greater than the chance that they hit new all-time lows, so I would be locking my rate in during the beginning of 2013 rather than hoping rates drop from their current levels.
Chief economist, Mortgage Bankers Association, Washington, D.C.
"Mortgage rates are likely to stay below 4 percent through the middle of 2013, principally due to the announced ongoing purchases of mortgage-backed securities by the Federal Reserve under its (third round of quantitative easing) program," Brinkmann said in a news release. "The Fed has committed to buying $40 billion of agency (mortgage-backed securities) per month until the labor market shows significant signs of improvement. Based on (the Mortgage Bankers Association's) originations estimate, the Fed will be buying 36 percent of all mortgages originated in 2013, and a much higher percentage of those swapped into agency MBS.
Senior mortgage reporter, Bankrate.com
Rates should remain below 4 percent, at least during the first half of the year. They won't rise significantly until the Fed feels like it's time to let the economy walk on its own. If the unemployment rate falls to 6.5 percent and the Fed decides to end its bond-buying spree, rates will climb fast.
Homeowners who qualify for a refinance now should lock a rate soon. While we don't know whether rates will rise in 2013, we know they won't fall much further. As for homebuyers, they shouldn't decide whether it's time to buy a home or not based on rates. But if they feel like they are ready to commit to homeownership, they should move quickly to take advantage of the low rates while they last.
Waterstone Mortgage, author of TheMortgageReports.com, Cincinnati
Vice president and chief market strategist, Residential Finance Corporation, Marlboro, N.J.
Worldwide money printing will also add to the low-rate environment. But the second half of the year may include a move higher in rates.
Senior loan officer, RPM Mortgage, San Francisco
Investors believe that the "fiscal cliff" issue is over. While I may scoff at the importance of the fiscal cliff, the fact is that concern about it did affect markets and drive Treasury rates unnaturally low. I will guess that there was a fiscal cliff premium to price, which drove yields down an extra 0.2 percent.
Assuming that inflation remains well-contained, the attention of fixed-income security buyers will become quality-based. Fiscal irresponsibility in the European Union is part of what drove rates on fixed-income securities down in the United States, and the problem there is not going away anytime soon. In the U.S., in addition to standard $1 trillion-plus deficits, we are facing entitlements, which have an underfunding with a present value of about $78 trillion.
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.
Assistant managing editor, Bankrate.com
How sure am I of this? For the past four or five Decembers, I have felt confident that mortgage rates would rise in the coming year. In that time, mortgage rates continued trending downward. A year ago, I felt sure that rates would go up in 2012. The 30-year fixed began this year at 4.18 percent, and now it's almost three-quarters of a percentage point lower. So I'm not wildly confident about my prediction.
Nevertheless, when rates are this low -- around 3.5 percent -- it's hard to believe that they could go lower. The economy seems to be gathering steam, and that's why, this time, I really do think rates will rise in the coming year. Not by much, though. I still think rates will be 4.5 percent or below a year from now. Your home-purchasing decision will be driven more by what's happening to prices than by what's happening to mortgage rates.
Senior financial analyst, Bankrate.com
President, Americana Mortgage Group, Manhasset, N.Y.
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