NAR: Mortgage rates will inch up to 5% in 2015

by MPA08 Dec 2014
Say goodbye to the era of low rates as they are expected to increase next year, according to the National Association of Realtor's (NAR) five top housing predictions for 2015. The report also showed first-time home buyers are expected to re-emerge in the new year after mostly staying out of the market in the aftermath of the housing crisis

In the middle of 2015, mortgage rates are expected to increase as the Federal Reserve increases its target rate by at least 50 basis points before the end of the year. That will likely bring the 30-year fixed-rate mortgage to an average of 5% by the end of 2015. (It's currently averaging 3.89%, according to Freddie Mac.)

While fixed interest rates for 30-year mortgages are predicted to increase, the one-year, adjustable-rate mortgage, on the other hand, is expected to rise more minimally. "Lower ARM interest rates will influence an uptick in buyer interest for adjustable and hybrid mortgages," noted. "While still at historic lows, rate increases will affect housing affordability for first-timers trying to break into the housing market and will be another factor pushing them to less-expensive locales."

"The residual financial effects of recession-driven job losses and subsequent unemployment have impeded millennials' entry into the home-owning market," said Jonathan Smoke, chief economist for "In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery. If access to credit improves, we could see substantially larger numbers of young buyers in the market. However, given a high dependency on financial qualifications, this activity will be skewed to geographic areas with higher affordability, such as the Midwest and South."
Click here to view NAR’s top five housing predictions for 2015.


  • by | 12/8/2014 9:21:13 AM

    Didn't they say rates were going to go up this year, too?


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