What will mortgage rates be in 2011?
By December of this year, the average mortgage rate could be close to 6 percent from the current 5 percent average rate. By December of 2011, the rate could be 6.5 percent. I do not foresee the rate going above 7 percent, at least for a prolonged period, in the next two years. The reasons for the increase are due to the macroeconomic forces of a recovering economy and a very high budget deficit. But relatively benign consumer price inflation will keep the lid on mortgage rates from rising too high. For those engaged in the jumbo market, you will note that rates are already that high. But the high rate on jumbo mortgages and on construction loans is due to the lack of government backing for these loans. From about the second half of this year, the banks will clearly have built up a strong capital buffer, and any further bank profit will then be used for lending to non-government backed sectors. So the mortgage rates on jumbo and commercial real estate could indeed fall a bit due to an i
