You heard that right…5%. The days of 4% – 4.25% are over. Get ready to welcome the 5′s after the new year. I could try to pretend that I understand the workings of the bond market or how MBS (mortgage backed securities) dictate loan pricing but I won’t. I’m here to inform you that currently a 30 year loan is around 4.83% and it’s not going back below 4.5%. I’m also providing my opinion of where the rates are headed.

What do I think is driving this rate hikes? Thanks for asking…because the gloom is lifting. That feeling of dread I’ve lived with for last three years isn’t eating at my stomach lining quite so much. (Pretty scientific, huh?) It’s a hunch based upon a few years of experience. My ESP predicts a an old friend is going to settle in around the entire country….optimism. By the time spring is over we will look back and realize this fourth quarter of 2010 was the bottom.

How are my antenna hot wired to monetary policy? An excellent question….if I’m sensing a positive uptick then I KNOW the banks are sure of it. Once they are convinced that consumer confidence is growing they are going to want to cash in. The best way is to raise rates a little at a time. The last 30 days was fast but now there will be a lull before the next bump. As long as small increases don’t choke the recovery and stall the engine, mortgage lenders will keep going….I estimate summer of 2011 will reflect an average of 5.25% for a 30-year mortgage loan.

Why am I still smiling? Very observant of you…because I know that 5.25% money is STILL A FANTASTIC DEAL!!! I’ve been around long enough to know that 7% money is not the end of the world. If the economy is humming, 8% money won’t stop borrowers. So, move, jump, pull the trigger, make offers and get going while prices are dirt cheap! What a time to buy!!! Don’t let the rate of borrowing be your excuse to miss the best real estate values since 2004.

I’m going to buy and so should you!