real-estate-interest-rates

From Dina ElBoghdady at the Washington Post: Freddie sees mortgage rates hitting 6% in 2010

The average rate on a 30-year, fixed-rate mortgage rose to 5.05 percent this week and could climb to 6 percent by the end of 2010, if not sooner, according to giant mortgage financier Freddie Mac

The key catalyst for interest rates going forward will be the end of a Federal Reserve program that buys a sizable chunk of mortgage-backed securities issued by firms such as Fannie Mae and Freddie Mac. … the Fed has committed to winding down the program by March.

Amy Crews Cutts, deputy chief economist at Freddie Mac, said interest rates are bound to rise to 6 percent by the end of 2010 because private buyers will demand a higher rate of return on the securities than the Fed did.

This is similar to the comments made by Mark Zandi of economy.com earlier in the week:

“If you told me by the end of 2010 a 30-year rate was at 6 percent, that sounds about right,” says Mark Zandi, chief economist at Moody’s. “I don’t think there’s any question rates are headed up.”

What are your thoughts? Will rates being going up in 2010?

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