Interest rate predictions in 2013


Lucas intro: It's a new year and that means a look ahead at what we'll see with interest rates on consumer products over the next 12 months. Joining me is Greg McBride, senior financial analyst for Bankrate.com, to provide the 2013 Interest Rate Forecast. Greg, let's start with mortgage rates. What does the year ahead look like?

Greg: I expect mortgage rates to stay at very low levels in 2013, which is conducive to more home sales and improvement in the housing market. If economic improvement continues, mortgage rates will trend higher, but I expect the 30-year fixed to stay under 4 percent for most of the year. Of course, if the economy falters, mortgage rates would move lower, but be careful what you wish for.

Lucas: What do you see on other consumer products, like credit cards, car loans and home equity?

Greg: It will be a good year on all three fronts. I don't see much movement in credit card rates, but it will still be an environment ripe for shopping around to get a better deal. I expect auto loan rates will be slightly lower, resetting record lows, and you'll still find those sub-3 percent rates if you're shopping around. And I expect we'll still see lower rates on home equity because stabilizing and rebounding home prices will have lenders competing for home equity business in a way we haven't seen since the waning days of the housing boom.

Lucas: That all sounds very positive. But is there any good news for savers?

Greg: Yields may not get much worse, but that's not to say they're going to get better. The only measurable improvement will be on the top-paying accounts, particularly savings accounts and money market deposit accounts, especially for banks that may see a run-off in deposits due to the expiration of the Transaction Account Guarantee program for large depositors. So be sure to shop around.

Lucas close: Thanks, Greg. Sounds like some opportunities exist for consumers in the year ahead and there is no better way to keep tabs on what is happening with interest rates than by visiting Bankrate.com. I'm Lucas Wysocki.



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