Mortgage Bankers See Rising Rates Next Year

Washington, DC, Oct. 28, 2010 -- Mortgage bankers are predicting that interest rates will rise from historic lows to over 5% next year.

The Mortgage Bankers Association said rates on the 30-year fixed-rate mortgage will average 4.4% in the fourth quarter of 2010, increase to a 4.7% average in the first quarter next year, and rise to 5.1% by the end of next year.

MBA economist Jay Brinkmann said he expects a pickup in purchase originations next year, but 2011 volume for mortgages to buy a home will still only be roughly at its 2009 level.

However, the refinance business is likely to drop next year as mortgage rates rise.

Total mortgage volume is expected to be nearly $1 trillion in 2011, down from an anticipated $1.4 trillion this year and nearly $2 trillion in 2009.