Top 10 Real Estate Predictions for 2009

Because mortgage rates are influenced by mortgage bonds and mortgage-backed securities, not fed rate cuts, I predict interest rates could rise to 7% in 2009. Maybe more if investors continue to worry about inflation and the government adds a new supply of U.S. Treasuries to the market to offset the looming deficit.

On November 7, 2008, as I write this, the federal funds rate is 1%. It's not likely to go much lower and, in fact, will probably go up. Mortgage rates are not tied directly to the federal funds rate but that does influence its movement. Historically, mortgage rates exceeded 8% from 1970 to 1992.

So while the bad news is rates will rise, they won't surpass 8%.

_{At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.}