According to the Kiplinger Letter, 30 year fixed mortgage rates will be in the neighborhood of 6% this Spring, even higher if the recovery is stronger than expected and businesses start selling corporate bonds to fund capital investment projects.
The upward push will come just as the Federal Reserve quits buying mortgage debt. Right now, the Fed is buying 80% (!) of home mortgages being written, filling in for a largely absent private secondary market. But the Feds efforts to keep rates low and prop up the housing market is slated to wind down between now and March 31st.
Incidentally, the reasons investors are staying away from purchasing mortgages in the secondary market are many: Oh, but my broker says not to worry! This is a subject for another day, but excercise caution if you decide to go this route. You might be buying great risk if you are reaching for yield.
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