Inflation, Fed Action Set Stage For Higher Mortgage Rates

FILE - This April 16, 2020 file photo shows a real estate company sign that marks a home for sale in Harmony, Pa. U.S. average rates on long-term mortgages rose this week but remained at historically low levels. Mortgage buyer Freddie Mac reports, Thursday, Aug. 13, that the average rate on the 30-year home loan increased to 2.96% from 2.88% last week. (AP Photo/Keith Srakocic, File)

(AP) — Mortgage rates are hovering near all-time lows, but that could begin to change. The Federal Reserve is poised to start dialing back monthly bond purchases that have helped keep mortgage rates at ultra-low levels for much of the last 18 months. Economists expect the average rate for a 30-year mortgage to rise from around 3% now to around 4% next year. That would mean less buying power for would-be homebuyers and less attractive options for homeowners seeking to refinance. “The likelihood is that we see higher rates, not lower rates in the months ahead,” says Greg McBride, chief financial analyst for Bankrate.

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