Industry NewsMortgage

The myth of rising rates

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The predictions seemed to come from every direction, but the message remained the same: Interest rates for mortgages would come close, if not hit, 7 percent by the end of this year. Now, more than halfway through 2004, it seems unlikely that interest rates will hit that 7 percent mark as originally predicted. Instead, they're still hovering around 6 percent, despite one hike in the federal funds target rate and another, which is widely expected to happen today. Perhaps the worry of significantly higher interest rates this year was simply a myth. "In reality, (rates) declined in the first quarter, shot up during the second quarter and then came back down," said David Lereah, NAR's chief economist. "The bottom line is mortgage rates have been lower than expected, the economy is improving and jobs are being created in an environment of strong housing demand – all favorable factors for record home sales." The Federal Open Market Committee meets today and is expected to rai...