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Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here with Pat Esswein, the Housing Editor of Kiplinger's Personal Finance Magazine to talk about the outlook for mortgage interest rates in 2007. Pat, what is going to happen to rates this year, how is it going affect housing?
Pat Esswein: Well we ended the year 2006 with a 30-year fixed rate at about 6.4% and we expect that by the end of 2007, we will be up just a tad at about 6.7%.
Kevin McCormally: Well 6.7% is a little below the peak in 2006, so what do you think this means for housing markets during the year?
Pat Esswein: It won't necessary boost the market a lot, but it sure cannot hurt; it may soften this landing of the housing market.
Kevin McCormally: What about home equity lending?
Pat Esswein: Home equity rates are expected to be stuck at about 8% through the year 2007 and it just depends on what the Fed decides they need to do about the prospect of inflation.
Kevin McCormally: But it is possible though that they will just leave the rate alone so it will be there.
Pat Esswein: Yes.
Kevin McCormally: What about someone who has an adjustable rate mortgage that has an adjustment coming up in the next few months; should you maybe rushing out to refinance into a fixed-rate mortgage now?
Pat Esswein: Not necessarily; I think the key here is to not panic. What you really need to do is look at your numbers and look at your mortgage terms. And then go to a calculator like we have on our website, Kiplinger.com; run the numbers, consider what if? If your rate is going to adjust and you are going to get socked with a significantly higher payment, you may want to think about refinancing into a fixed rate mortgage.
Kevin McCormally: Pat thank you very much.
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