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How High Will Mortgage Rates Go?

How High Will Mortgage Rates Go?
Photograph by George Doyle/Getty Images

My heart beat a little faster when I read the news that the average interest rate for a 30-year mortgage reached a four-month high yesterday, at 3.53 percent for a loan. As a renter, I couldn’t help but wonder if I’m missing out on this once-in-a-lifetime chance to borrow for next to nothing.

Rates are now up almost a quarter-point from the mid-November record low of 3.31 percent, but looking into the numbers, it’s clear that I shouldn’t be worried. Mortgage rates will be going up over the next two years—but not too fast, according to the most recent forecast by the Mortgage Bankers Association. The MBA expects rates to hit 4 percent in the second quarter and 4.4 percent by the end of the year. By the end of 2014, the trade group predicts rates will scooch up a bit more, to 4.6 percent. Having rates rise more than a full percentage point does start adding up to real money in a household budget. An extra percentage point on a 30-year, $300,000 loan adds about $3,000 a year in payments.