Are Charleston mortgage rates headed higher in 2010
Probably, but how high might they go since they have edged up in recent weeks.
In an article on CNBC, Mark Zandi, chief economist at Moody's says:
"If you told me by the end of 2010 a 30-year rate was at 6 percent, that sounds about right. I don't think there's any question rates are headed up. I think there's the possibility of some Fed tightening and driving up long-term mortgage rates. Inflation is the key. Inflation is still low, but if it starts up, the Fed may be forced to play its hand in raising rates."
The Fed has driven down mortgage rates to record lows by buying mortgage backed securities. That is expected to end in March 2010. Rates are probably one half percent below market due to Fed purchases.
As to inflation, and this is just my personal opinion, I think it has been understated for years by the government statisticians. Most anytime you go out and buy something, the price is higher. But due to the convoluted way these geniuses can calculate, they have kept inflation in check for years. But they may not be able to do it for very much longer. And in a rising inflationary environment, it isn't whether or not the Fed tightens that matters, bond investors want a higher interest rate to compensate for the declining value of a long term bond.
But let's put things in perspective by taking a look at the long term mortgage chart below and you'll see rates are not just low but historically low. At 5 percent, we've become greedy. I remember buying a home in the late 80's and was delighted to have a 9 percent interest rate. And I don't believe we're going to be at 9 percent in the foreseeable future. But I wouldn't be surprised to see 6 percent by summer and maybe 6 1/2 to 7 percent by the end of 2010.
And low mortgage rates do increase affordability so if you are thinking about buying a home in Charleston next year, the earlier you are able to buy in the year, the lower your mortgage interest rate will be. Or, to paraphrase the vote early, vote often mantra of Chicago politics I remember from growing up, you can apply it to Charleston real estate as well:
Buy early and buy often. 
