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22
Feb
2017

WILL MORTGAGE INTEREST RATES RISE IN 2017?

Mortgage rates may be trending down at the moment — but what comes down will go up as the year progresses, according to several key housing economists who spoke at the recent International Builders Conference in Orlando.

The forecast by Robert Dietz, chief economist at the National Association of Home Builders, was the worst of the bunch. He expects rates to hit 4.8 percent on average by the end of the year and jump to over 5 percent in 2018.

The forecast offered by Frank Nothaft, Dietz’s counterpart at CoreLogic, is a bit less pessimistic. The former chief economist at Freddie Mac sees rates at 4.6 percent by the end of the year.

And though ex-Fannie Mae Chief Economist David Berson didn’t put any numbers to his forecast, he said three adjustments in the Fed Funds rate this year and four or more next year are certain to drive loan costs higher.

But Berson, who now hangs his shingle at insurance provider Nationwide, said rising rates “won’t have much an impact on housing demand” because strong wage gains and job growth “will give people the wherewithal to offset” the higher monthly costs.

Will inventory improve?

Dietz also sees better years ahead, despite higher rates. He is looking for a 10-percent increase in single-family housing starts this year, to 855,000 units, and a 12 percent jump in 2018, to 961,000 units.

Even at that, though, builders won’t be producing houses at what...

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