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Will rates rise or remain relatively unchanged? Experts and Bankrate analysts predict where mortgage rates are headed over the next week.
For the coming week, (Oct. 21-27), 50 percent of the panelists believe mortgage rates will remain relatively unchanged (plus or minus 2 basis points); 33 percent think rates will rise; and 17 percent think rates will fall.
Click on the three tabs above to read the comments and rate predictions of mortgage experts and Bankrate analysts. Bankrate.com surveys experts in the banking and mortgage fields to see if they believe certificate of deposit and mortgage rates will rise, fall or remain relatively unchanged. For the deposit index, the panel comprises banks, thrifts and credit unions that directly offer FDIC-insured certificates of deposit to the end consumer. For the mortgage index, the panel comprises mortgage bankers, mortgage brokers and other industry experts who provide residential first mortgages to consumers. Results from Bankrate.com’s CD Rate Trend Index will be released monthly. Results from Bankrate.com’s Mortgage Rate Trend Index will be released each Thursday.
Rates are low and there’s not much room to fall. Also, the foreclosure scandals could increase the perceived risk of owning mortgages, pushing up rates.
Kevin Breeland General manager, Residential Mortgage of South Carolina, Mount Pleasant, S.C.
In the past few months, we have seen rates track with proven economic factors. Additionally, rates have tracked on fears, concerns and general news items that typically would have no effect either way. Next week is shaping up to track with the fears, concerns and general news items. I expect rates to increase next week by 0.125 percent.
Michael Becker Mortgage banker, Happy Mortgage, Lutherville, Md.
Last Friday, Federal Reserve Chairman Ben Bernanke gave a speech where he hinted that additional monetary stimulus may be warranted because inflation is too low. Bonds sold off, and rates increased because higher inflation decreases the real return of fixed-asset investments.
Bernanke’s quest for higher inflation will run into the deflationary effects of deleveraging and a new generational aversion to debt. Because of this, I see mortgage rates dropping in the coming week.
Dan Green Waterstone Mortgage, author of TheMortgageReports.com, Cincinnati
The Federal Reserve meets in two weeks, and bond markets are pricing in their expectations.
Dick Lepre Senior loan officer, RPM Mortgage, San Francisco
Federal Reserve intervention will drive rates lower in the short term. The inevitable effects of another large increase in the monetary base eventually will be inflation and much higher mortgage rates.
If you are a borrower, get the heck out of any adjustable-rate mortgage — be it a first or a really, really low (at present) ARM. In less than two years, fixed-rate mortgages could easily be 3 percent or more higher than they are at present. The Fed is seeking inflation as a solution and eventually will get it. The risk is that once the Fed incites inflation, it could be difficult to contain.
The Federal Reserve is poised to resume purchasing bonds, but foreclosure issues could push rates higher instead.
Derek Egeberg Certified Mortgage Planning Specialist and branch manager, Academy Mortgage, Yuma, Ariz.
The market swings have remained wider than the historical trend. The risk of rising rates is greater than the possible reward of waiting for any further reduction in rates.
David Kuiper Mortgage planner, First Place Bank, Holland, Mich.
Mortgage rates continue to trade in a very narrow range (with a lot of intra-day volatility). They should remain at or near record-low levels, thanks to a weak employment picture, struggling manufacturing and consumer confidence, and the pending Federal Reserve intervention. Consult your local mortgage professional today to see how you can take advantage of this historic opportunity.
Mitch Ohlbaum Vice president of business development, Mortgage Capital Associates, Los Angeles
The 10-year Treasury is trading at 2.47 percent. Inflation is down below the comfort level of the Federal Reserve and the real rate is also declining, making the recovery look worse.
The Treasury repurchase program may be brought back. But while experts want to lower rates, it may not have the desired effect. Beyond that, these lower rates are causing refinances to explode to record levels, giving no one reason to lower mortgage rates any further.
Jim Sahnger Mortgage consultant, Palm Beach Financial Network, Stuart, Fla.
Rates have remained range-bound for the better part of the last four weeks. I expect more of the same, with some days better to lock than others.
However, additional news on QE2 could disrupt the markets, depending on what is released and its timing.
Tommy Xintaris Senior mortgage consultant, Houston
The Federal Reserve releases its next statement Nov. 2-3. Until then, I’m expecting mortgage bonds to remain relatively flat-lined.