Where are Mortgage Rates going

What's the mortgage rate?

If yields rise, home loan interest rates also tend to rise. Mortgage rates are not set by the Fed. The group' s policy and rhetoric, however, can influence the direction in which mortgage rates go.

graduate economists: Here's what mortgage rates will do in 2018 and beyond | 2017-10-24-24

Overall, mortgage interest rates fell in the course of 2017, after having risen above 4% in January. What will be happening in the next few years? The Mortgage Bankers Association's top house economics analysts predict that mortgage rates will increase over the next few years, above 4% and even above 5%.

At an MBA Annual meeting in Denver, Michael Fratantoni, principal Economist and Seniors VP of Research and Technology, Marina Walsh, VP of Industry Analytics, and Lynn Fisher, VP of Research and Economics, debated the MBA's vision of how the business and real estate markets will evolve over the next few years.

Fratantoni first said that the MBA predicted that the mortgage buying portfolio will increase further until 2020, while refinancing will decline further as interest rates increase. Regarding interest rates, Fratantoni said that the MBA thinks mortgage rates will increase to 4.6% next year, then over 5% in 2019 and 2020.

Later, in the meeting, Mr Fischer debated the MBA's perspective on the prospects for the residential property sector. Mr Fischer said that the MBA's prediction shows that home values cannot keep rising at this forever. Fisher said that the MBA expected a stabilisation of property values, not a decline, but a slowdown in recent rises in the years ahead.

A further aspect of the residential eco-system, which is affected by increasing house prices, stems from affordable living. Mohamed El-Erian, senior business consultant to Allianz and former CEO and co-head in charge of investments at IBMCO, said Monday at MBA Annual that another contributing driver to the affordable nature of residential space is salary increases or the shortage of it.

Fratantoni says the pay rise will come. "It is becoming increasingly harder for businesses to fill their vacancies," said Fratantoni, but said that a growing number of businesses are planning to raise salaries to recruit skilled workers. While interest rates may rise in 2018 and beyond, borrower may be able to cope with these higher rates thanks to higher salaries.

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