Fannie Sees Modest Mortgage Rate Rise

With lenders already pricing future increases in the federal funds rate into their rate quotes, mortgage rates should rise only modestly throughout the rest of the year, Fannie Mae chief economist David Berson predicted at a Tuesday briefing for reporters.Mr. Berson said he expects rates to climb only by about 50 more basis points and come to rest at just over 7% by year-end. But he doesn't expect the higher rates to derail the housing market. Indeed, he said he expects home sales for the year to break the record set in 2003. "A broad-based and strengthening job market and the resulting acceleration in wages and salaries should offset the negative impact of rising interest rates on housing affordability," the Fannie Mae economist said during his semiannual economic briefing for housing reporters. Total sales so far this year are 13% ahead of last year's pace. Fannie Mae can be found online at http://www.fanniemae.com.