What to Expect With Mortgage Interest Rates

Every time I hear a prediction about the future from an expert, I wonder to myself whether anyone will recall if that prediction came true. As it turns out, there were many predictions that didn’t bear out over time. In fact, there are quite a few that are laughable.

Consider the following:

- In 1903, the president of Michigan Savings Bank warned Henry Ford’s lawyer Horace Rackham to protect his money. “The horse is here to stay but the automobile is only a novelty—a fad”

- In 1906, composer John Philip Sousa warned about “The Menace of Mechanical Music” in an article attacking machines that brought symphonies into people’s homes. He suggested that phonographs would completely eliminate the need to learn a musical instrument.

- "The world potential market for copying machines is 5,000 at most," IBM told the eventual founders of Xerox in 1959.

The list of predictions gone wrong is very long indeed and includes many “experts” who were absolutely certain that their vision of the future was correct.

I received a report recently about the predictions for mortgage interest rates over the next 12 months.

These predictions come from four reliable sources: The Mortgage Bankers Association, The National Association of REALTORS, Fannie Mae and Freddie Mac. Although they are not in agreement on the exact rates, they do share a common prediction that rates will be stable and decline slightly over the next 12 months. The average of their predictions has rates at 5.4% in the 4th quarter this year, and gradually dropping to 4.8% by this time next year.

I’ve been around long enough to know that these predictions can easily be wrong due to the fluctuations in our economy. I’d say that all things being equal, and stable, these predictions could bear out. On the other hand, if our economy stumbles, all bets are out the window.

The only mortgage interest rate that is certain is today’s.

Jonathan R. Krause, President Gambino Realtors

815.282.2222 | www.GoGambino.com