Dive Brief:
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Fannie Mae last week said mortgage interest rates will increase next year to 4.3%, less than the 4.5% rate it predicted in an earlier forecast. The average national rate has hovered at around 4% since mid-October.
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The mortgage finance agency’s Economic and Strategic Research Group also predicted the economy will grow 2.5% in 2015, which would make it a slightly better year than this one.
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Just a day earlier, Freddie Mac predicted the U.S. economy will grow 3% and mortgage interest rates will rise to 5% by the end of 2015.
Dive Insight:
In fact, many economists, including some associated with the housing industry, are predicting that interest rates will reach 5% or close to it in 2015. Despite Fannie Mae’s outlook for a more moderate increase, don’t expect a breakout new year for the economy or for housing.
Doug Duncan, Fannie Mae’s chief economist, said a combination of growing consumer confidence and a strengthening job market are helping to quell the fears would-be homebuyers have about taking on mortgage debt during a shaky economy. But housing will “grind its way upward” for the rest of this year and next, he said, noting, “We expect that the market will turn more toward the purchase market in 2015.”