As Federal Reserve Chairman Ben Bernanke announced this week the central bank may scale back its stimulus efforts, analysts expect mortgage rates will soon steady — a boon to homebuyers and the economy, the New York Times reported.
After months of historically low mortgage rates, followed by a recent spike, mortgages may finally have settled at a healthy equilibrium of about 4 to 4.5 percent, experts told the Times.
Rates on 30-year fixed mortgages rose to 4.25 percent yesterday, an increase from 4.12 percent Wednesday. Greg McBride of Bankrate.com told the Times he projects borrowing costs on those mortgages will stick in the that range for the rest of the year.
“Mortgage rates tend to move a lot in a short amount of time, then do nothing for a longer period,” McBride said.
The upward trend in mortgage rates means higher borrowing costs for home buyers in the long run, of course, but their effect on the overall market may not be as bad as once projected.
“Clearly, mortgage rates and bond yields will be higher in the long run than they are today,” McBride said.
Rates averaged 6.5 percent on 30-year mortgage notes between 2000 and 2007, the report said. [NYT] –Mark Maurer