Mortgage rates have remained relatively low this year, and little changed, despite previous predictions of an inevitable rise. Borrowers, though, may be wondering how much longer this environment can last.

At this point, waiting for the rise in interest rates “is a little bit like ‘Waiting for Godot,’ ” said Stan Humphries, the chief economist for Zillow, an online real estate information service, referring jokingly to the Samuel Beckett play named for a character who never shows up.

Mr. Humphries and other economists are now predicting that the average 30-year fixed-rate mortgage will hit 5 percent by the middle of next year, partly as a result of the Federal Reserve’s planned withdrawal from buying mortgage-backed securities. Last week, the 30-year national average was 4.28 percent, according to HSH.com, a publisher of loan information.

While 5 percent is still low by historical standards, an increase of that size can reduce buying power more than borrowers may think. According to Zillow, a 1 percent rise in interest rates could raise monthly mortgage payments on a typical home next year by more than $700 in pricier parts of the country. Zillow compared the effect of a rate increase to 5.1 percent from 4.1 percent for a 30-year mortgage in 35 metropolitan areas. Figuring in the expected increases in home values over the next year, Zillow found that monthly payments would rise by as little as $65 in the St. Louis area and as much as $710 in the San Jose/Silicon Valley region.

In the New York metropolitan area, which includes Northern New Jersey, Long Island and Westchester, monthly payments would rise by about $200.

While a rise in rates of even 50 basis points can have a substantial effect on demand, Mr. Humphries noted that for the country as a whole, homes are still relatively affordable. From 1985 to 2000, paying the principal and interest on a median-priced home ate up about 22 percent of median household income, he said. Now, people are spending about 15 percent of median income for the median-priced home.

“So even when rates go to 7 percent, it will still be affordable” in most areas, Mr. Humphries said.

Los Angeles and the Bay Area are glaring exceptions, as home prices there are demanding 40 percent of household income.

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By: Prevost, Lisa.  When Mortgage Rates Rise.

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