Freddie Mac sees Mortgage Rates Rising
"Mortgage rates could increase to 6% by the end of 2010, or possibly sooner", according to Freddie Mac. Rates have been rising in recent weeks, & the avg interest on a 30yr fixed mtg has now topped 5% for the first time since the end of October. The Federal Reserve has been buying mtg backed securities issued by firms such as Fannie Mae and Freddie Mac, which has helped keep mtg rates at low levels, but the central bank plans to wind down these purchases next mth. The Fed believes that gradually tapering their purchases will draw private investors back into the market & limit the increase in rates. Deputy Chief Economist at Freddie Mac expects private buyers to demand higher rate of return on the securities than the Fed did & believes that lenders may have to raise the rates they charge to consumers as a result.