Written by Frank Cotolo
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Topics: Washington, mortgage

Saturday, 10 July 2004

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Money matters with mortgages.

WASHINGTON - Mortgage rates have come down. But experts say they will rise again.

The Federal Reserve pushed short-term interest rates higher for the first time since 2000, and 30-year fixed-rate mortgage rates dipped near 6 percent.

"But they could go to 7 percent, and 8 after that," said one expert, who often keeps track of interest rates. "It isn't always going to be this low."

"This is good news for house-hunting, as lower rates mean more affordable housing," says Frank Nottaham, a top economist. "And when houses become more affordable, we find that more people buy them. Some buy two, three and four at a time. It's great fun."

"But it could turn around tomorrow," said another expert.

"Not tomorrow," added another expert, "because it is Sunday."

"Oh," said the expert who said it could turn around tomorrow. "But definitely next week it could go up."

Many seem to agree that the rate could rise.

The decline, however, was largely a result of evidence that the economy might not be as strong as thought, pointing to a report in TheSpoof, which people did not rate very high, but was humorous in a subtle way.

Mr. Nottaham said the average rate for a 15-year fixed-rate mortgage dropped to 5.42 percent and pointed out that that "is lower than 6 percent, for sure."

Still, it's anyone's bet how long the attractive rates will last.

In the most-recent survey mortgage experts were asked to predict where mortgage rates are headed in the next 30 to 45 days. One hundred percent predicted rates would either rise or go down. The National Association of Realtors refused to take a stab at it.

"The dynamics of this marketplace are characterized by a number of things," said Federal Reserve spokesman E. Barrabut Loin. "And each element is tender and ready to snap like a spider in a wind storm. No one can tell what comes up but they know it must come down. How far down anything can go is still to be determined, no less watched, analyzed and turned into a musical."

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