Home Buying in Duluth>Question Details

James Ronding, Real Estate Pro in Superior, WI

Do you think the interest rates will go up, stay the same, or go down in the next year?

Asked by James Ronding, Superior, WI Wed Nov 27, 2013

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Hi, James!
Well, they are certainly trending up now, aren't they. So, my take is, it depends. I hope we've all learned our lesson about prognosticating with regard to the real estate market or mortgage interest rates.

The mortgage industry has been speculating for years that rates are going to skyrocket. They haven't. So, I suspect there will be a steady increase, hopefully not too fast so as to cool down the buyers and, therefore, the market altogether.
0 votes Thank Flag Link Sat Nov 30, 2013
Clearly you are asking for a best guess. I'm predicting fairly stable mortgage rates next year, with a small decline early in 2014 and some modest increases during the warmer months. A lot depends on the Fed and the pace of the economic recovery. Unfortunately, we are not seeing signs that the recovery rate will accelerate, which probably means the Fed will not dramatically change course either.

Best,
Ron
0 votes Thank Flag Link Wed Nov 27, 2013
I think they will go down. The fed is going to keep pumping the system full of dollars.
0 votes Thank Flag Link Wed Nov 27, 2013
Well first off I am seeing most of my buyers getting somewhere around 4.5-5% right now for interest rates, which is pretty much a full point in one year. Every lender I talk to is telling me we can expect another point increase by the end of 2014. From there? Who knows but I am in total agreement that even 5% is too low realistically to sustain. Even with the increase in interest rates we saw a decent price gain this year in the metro.

Could you imagine how much more crazy this market would be if rates were still at 3.75? Yikes! In many ways I welcome rising interest rates to stop this hyper appreciating market and get us back to normal.

A lot will depend on the Feds (of course) and if they will continue to purchase bonds. We know that they decided to continue this fall.

Besides stating the obvious which is we can not be 100% certain I would be shocked if interest rates go down over the next several years...just way too much money getting thrown into the system. Defining "normal" is tough, but I think once we get to a more stable 1-4% yearly increase in home prices then interest rates should hopefully stabilize. My best guess is the mid 6's.

Which just means we will have a crazy period where assumable mortgages get talked about a lot with all those wonderful FHA buyers who were lucky enough to buy under 4%!

~Chris
0 votes Thank Flag Link Wed Nov 27, 2013
Predictions are very difficult; especially about the future.
0 votes Thank Flag Link Wed Nov 27, 2013
Yes = possibly to all three parts...I think we will see a general uptick, some changes in programs which will affect buyers and sellers, and, as the number of foreclosures drops and prices rise, buying power will decline. There are some good end of the year values in the housing market. Check it out; get pre-qualified, if you might buy, and you will indeed be able to use the market changes to your advantage. IZ 612-986-4105
0 votes Thank Flag Link Wed Nov 27, 2013
Interest rates will almost surely go up next year, I think hit 4.5-5% and go up another point for 2015.
0 votes Thank Flag Link Wed Nov 27, 2013
I personally think the rates will slowly rise throughout the year, possibly maxing out at about 5%. Thankfully my powers of predicting interest rates have been proven wrong in the past, and in this case I hope they are wrong again and will stay around 4%. I am curious what others out there think!
0 votes Thank Flag Link Wed Nov 27, 2013
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