Record low rates are behind us – Freddie Mac economist

Mortgage interest rates have been on the rise for the past month off the all-time record lows set just a few weeks ago.

“I do think that perhaps the all-time low is behind us,” said Frank Nothaft, Freddie Mac’s chief economist.

The record low for the 30-year fixed-rate averaged 3.31 percent in November, according to Freddie Mac’s weekly mortgage market survey. For the week ending February 7, Freddie Mac reported a national average of 3.53 percent for the 30-year fixed-rate mortgage, the same as a week ago. Last year at this time, the rate was 3.87 percent.

Nothaft expects rates to gradually increase, possibly ending 2013 at about 3.75 percent. By 2014, he expects rates to average above 4 percent.

“If the economy is getting better, slightly higher interest rates are a natural occurrence,” Keith Gumbinger, vice president of HSH.com, a mortgage tracker, told USA Today. “But there’s no reason to believe that rates are headed upward in a straight line.”

While higher rates will likely curtail refinancing, since that tends to be more interest-rate driven, some housing experts don’t expect the slight rise in rates to affect home purchases, which are more driven by jobs and lifestyle changes. Plus, while mortgage rates are up, they are still near historical lows.

Rates will likely still low based on historical averages too for sometime. The Federal Reserve has vowed to buy $40 billion a month in mortgage-backed securities to keep rates low until employment improves.

“Until the economy strengthens and the job market picks up, we won’t see rapidly rising interest rates,” said Doug Lebda, CEO of LendingTree, an online lender exchange.