What will happen when mortgage rates rise?

September 26, 2014

With the U.S. economy in recovery, the Federal Reserve has indicated that interest rates will start to rise, probably in 2015.

 

A number of economists are predicting that the average 30-year fixed-rate mortgage will hit 5 percent by the middle of next year. Though this is still a low number by historical standards, the economists are projecting that an increase of that size can reduce buying power more than borrowers may think. For example, a 1-percent rise in interest rates could raise monthly mortgage payments on a typical home next year by more than $700 in pricier parts of the country.

 

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