By Troy Corman, t2realestate.com
During the Mortgage Bankers Association's annual meeting, mortgage pros predict that mortgage rates will rise to 5.1% next year, and will top 6% in 2012. That is, "barring any "blockbuster" announcement from the Federal Reserve next month," said Jay Brinkman, chief economist of the Mortgage Bankers Association.
Mr. Brinkman expects purchase mortgage volume to increase in 2011 to $626 billion next year, up substantially from an expected volume of $480 billion in 2010. Refinanced mortgage loans however, are expected to drop from $921 billion this year to only $370 billion in 2011.
The Mortgage Bankers Association also predicts that home sales will drop 8% this year, while rising 2% in 2011, and jump up 16% in 2012. New home sales will rise by 20% in 2011, and explode to a 40% increase in 2012, predicts the MBA.
Obviously, better economic news will help consumer confidence, and as rates begin to rise, buyers will get off the fence to lock in low mortgage rates. The risk is, as the FED continues to print more money, that rates could jump significantly higher, as inflation has already taken root in agricultural commodities and metals.