NAR Sees 7% Mortgage Rate in 3Q

Mortgage rates are rising faster than expected, and the 30-year fixed mortgage rate will likely hit 7% in the third quarter, according to a new forecast by David Lereah, chief economist for the National Association of Realtors.However, job creation and economic growth will offset rising rates, and existing-home sales are likely to fall only 6.4% in 2006 from last year's record of 7.08 million sales, the forecast says. At the beginning of the year, the NAR's forecast called for the 30-year mortgage rate to drift up to 6.9% by year-end. But now Mr. Lereah projects that the 30-year rate will rise to 7% this summer and hold at that level in the second half of the year. Meanwhile, Freddie Mac's new forecast predicts that the 30-year fixed mortgage rate will average 6.6% in the third quarter. The NAR can be found online at http://www.realtor.org.