No. 1: Conforming loan rates are rising
While no one can know for certain what will happen with mortgage rates in 2014, Cameron Findlay, chief economist at Discover Home Loans in Irvine, Calif., believes rates for 30-year fixed-rate mortgages will reach 5.25 percent by the end of 2014.
Bob Walters, chief economist for Quicken Loans in Detroit, Mich., says conforming rates are driven by market and institutional forces such as fees charged by Fannie Mae and Freddie Mac to lenders which are embedded in your interest rate.
“A planned increase in guarantee fees has temporarily been put on hold, but it would have increased mortgage rates by about one-eighth percent,” says Walters. “In order for the market to push rates up significantly higher, the economy would have to be running on all cylinders with wage and employment growth. That’s not happening yet, so I think rates will range from 4.5 to 5.5 percent this year.”
Walters says current fees from Fannie Mae and Freddie Mac add as much as 0.5 to 0.75 percent to conforming rates and could be raised later this year. Walters suggests homeowners who want to refinance act early in 2014.
“If you want to buy a home, make sure you’re ready and know where you want your family to live, but if you do, then you should act earlier rather than later, too,” he says.