With the U.S. economy in recovery, the Federal Reserve has indicated that interest rates will start to rise, probably in 2015.
A number of economists are predicting that the average 30-year fixed-rate mortgage will hit 5 percent by the middle of next year. Though this is still a low number by historical standards, the economists are projecting that an increase of that size can reduce buying power more than borrowers may think. For example, a 1-percent rise in interest rates could raise monthly mortgage payments on a typical home next year by more than $700 in pricier parts of the country.
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