Where Will Mortgage Rates Be In 5 Years?

Posted on | December 14, 2008 | 3 Comments

When asked questions about the future one must first research the past.  When looking at the chart of mortgage interest rates over the last 35 years the first noticeable trend is the downtrend from 1982 to present.  It is amazing to think that Americans were willing to pay over 18% for a home mortgage in the early 1980s.  Today we are unhappy if rates creep back above 6%.  So what does the future hold for interest rates?

There is little doubt that mortgage rates will continue to creep lower as the Federal Reserve Bank is doing everything possible to decrease rates and stimulate the housing market.  This is likely for the next few years, but eventually the United States Treasury is going to stop pushing mortgage rates lower.  No one can legitimately pick a bottom for the housing market, but when there are newspaper and magazine articles as well as internet press releases that are titled “Now is the Worst Time to Invest in the Housing Market;” it is probably a great time to buy.  Going against the crowd has made many market mavens millions of dollars and this will hold true with the housing market.

In 5 years, it is likely that mortgage rates will remain under 8% but I feel they will have bottomed and will have started to climb back up.  Who knows how low the bottom will be as the Federal Reserve seems willing to do ANYTHING to lower them.  My guess would be 3.5% to 4% will be the bottom, but once again, no one knows for sure.  What are your predictions on where mortgage rates will be in 5 years?

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