Publication Date:
Fri, 2010-10-29 10:21
Article Image:
The Mortgage Bankers Association (MBA) predicts that 30-year fixed-rate mortgage rates will rise to 4.7 percent in the first quarter of 2011, and to 5.1 percent by the end of that year, according to a report [1] by the Wall Street Journal. Although the rates will rise, the group notes that a rate of 5.1 percent is still very low historically.
The rates could be affected by a “blockbuster” announcement from the Federal Reserve next month, said MBA Chief Economist Jay Brinkmann. The Fed has said that policy actions could be required to stimulate growth. According to Brinkmann, the Fed will likely purchase more Treasury securities, but this action was already factored into current rates.
Brinkmann also predicted that purchase originations will pick up in 2011, but that refinancing will decrease as rates go up. Homeowners who refinanced at low rates may be unwilling to give up those rates by moving or refinancing. According to the report, mortgage bankers are concerned about the effects the decrease will have on their businesses.
