MBA: Expect mortgage rates to rise steadily through the year

The Federal Reserve System’s Open Market Committee recently noted that it plans to keep target interest rates at current levels.

The Fed’s target interest rate will remain at between zero and 0.25 percent "for an extended period," the committee said recently. The committee’s decision was based on the fact that future economic conditions would "warrant exceptionally low levels" for the rate.

However, the end of March also marks the discontinuation of a Fed program that purchased mortgage-backed securities, and as a result some analysts fear that mortgage rates may rise. In all, $1.25 trillion in mortgage-backed securities have been purchased by the central bank.

"The committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability," a release said.

A recent forecast from the Mortgage Bankers Association said that the organization expects mortgage rates to rise steadily through the year. By the fourth quarter of 2010, the average interest rate on a 30-year fixed mortgage is expected to be 6.1 percent.

The fourth quarter of last year saw the average interest rate for these types of loans at 4.9 percent.