Freddie Mac: Mortgage Rates to Hit 4.5% This Year

Expect 30-year fixed-rate mortgages to gradually increase this year to about 4.5 percent, while new rental construction for 2012 is likely to surge to levels not seen since 2005.
These are two of Freddie Mac’s projections as part of its U.S. Economic and Housing Market Outlook for March.
The housing market is showing some signs of “shaking off the depression-like conditions that have plagued it for much of the past few years,” the report said.
Housing starts and home sales moved to higher – but still very low – levels of activity.
“The housing market continues to struggle amid strong economic headwinds,” said Frank Nothaft, Freddie Mac, vice president and chief economist. “However, a variety of encouraging indicators suggest that the housing market may be feeling a nascent recovery, and more neighborhoods may see a stabilization in overall demand and housing values this spring.”
Housing starts averaged nearly 700,000 on a seasonally adjusted annual rate over the November through February period, up 19 percent from the pace over the prior 12 months.
Roughly one-half of the increase in housing starts has been for construction of rental apartments in multi-unit buildings (two or more dwellings), the report said.
If the current pace is maintained, new rental construction in 2012 is likely to be the highest since 2005.

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