Interest rates for fixed-rate, 30-year home mortgages are likely to hold below 7% for the rest of the year, according to mortgage giant Freddie Mac. Chief economist for Freddie Mac, Frank Nothaft, said in an interview on Monday in Washington that 30-year rates will likely continue to rise in the upcoming months, but shouldn't go past 7%. Nothaft said that long-term interest rates could even fall and will probably not hit 7% until the second half of 2007. Freddie Mac was established by Congress in 1970. The company buys residential mortgages from private lenders and packages and sells them on the securities market. This process replenishes the nation's supply of home loan money. Interest rates on a 30-year, fixed-rate mortage currently average 6.79%, according to Freddie Mac. The housing market has been experiencing a slowdown, partly due to the increases in interest rates. Homes are staying on the market longer, and with a larger inventory, some areas are experiencing price stability or depreciation. With houses becoming less costly, more buyers could enter the arena, giving the market a soft landing that experts are looking for. Michele Joy of KB Homes said that when interest rates are below 7% it is a "great time to buy." "It's great news for the market," she said. "It's really good for the overall affordability index." Experts recommend fixed-rate mortgages to most consumers. With a fixed-rate loan, the risk is minimized as monthly payments stay the same throughout the term of the loan. Rising and falling interest rates do not affect the current loan. With stabilizing interest rates, and the risk of increases still looming, many experts predict that homeowners with adjustable-rate mortgages will refinance for a fixed-rate mortgage. |
