SEPTEMBER ISSUE: Capital Markets Update

As employment has struggled to gain momentum, there have been repeated false starts in predicted interest-rate increases over the past few years. But there is growing consensus in the industry that interest rates are really going up this time.

Ballon with Dollar; Image by Anikei/iStockphoto.com

Interest rates may be on their way up. And this time, it could stick.

As employment has struggled to gain momentum, there have been repeated false starts in predicted interest-rate increases over the past few years. Some borrowers and lenders may even have come to expect rates to stay low for much longer. But there is growing consensus in the industry that interest rates are really going up this time.

Patrick Ward, founder & principal of the mortgage banking company MetroGroup Realty Finance, is one of the industry participants who feels that the low rates era may be coming to an end. “After being through three very significant interest-rate cycles in my 40-year career, I feel interest rates will increase sometime in 2014,” he predicted.

Indeed, the Mortgage Bankers Association forecasts that interest rates for the benchmark 10-year Treasuries will begin increasing to 2.8 percent by the end of this year, and 3.3 percent by the end of 2015. “We anticipate that the growing economy will put upward pressure on rates,” explained Jamie Woodwell, MBA vice president of research and economics. “What we have seen is that there is a whole range of forecasts. But the expectation is fairly consistent that rates will increase. Rates have stayed low longer than most economists had anticipated.”

Read the full article in the September 2014 issue of CPE. Access is free!