It's Last Call for Mortgages Below 4%
BOSTON ( TheStreet) -- Act fast if you want to lock-in today's record-low 3.5% mortgage rates. Market watchers expect sub-4% home loans to go the way of the dinosaur by summer.
"I think this may be
Thirty-year fixed mortgage rates have averaged 8.7% since record-keeping began in 1971, but have all but collapsed since 2008's global financial crash.
Average rates fell below 5% in 2009 for the first time on record, then dropped to less than 4% in November 2011 and have stayed there since.But now, Yun and other experts predict today's rock-bottom rates will slowly rise during 2013 as the U.S. economy continues to recover and inflation risks grow. "My forecast is that higher inflation will force banks to charge extra interest to compensate for the loss of purchasing power in the money that consumers borrow," Yun says. He attributes the increased potential inflation primarily to the Federal Reserve's easy-money policies of recent years. Yun also says apartment rental rates -- the largest component of the government's inflation-measuring Consumer Price Index -- are rising as the number of U.S. households expands. "Higher rents will push up CPI, and higher inflation will mean higher interest rates for consumers as lenders try to make a profit," he says. Mortgage Bankers Association economist Mike Fratantoni foresees rates rising even faster than Yun does, predicting 30-year mortgages will average 4% by late June and hit 4.6% before 2015. "We expect that mortgage rates
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