Inflation, Fed action set stage for higher mortgage rates

By ALEX VEIGA
AP Business Writer

LOS ANGELES (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.