Even though the Consumer Price Index hit a 40-year annual high of 7.0 percent in December with the core CPI coming in at 5.5 and the Federal Reserve expected to begin to taper its asset purchase and raise the fed funds rate, Freddie Mac does not expect  mortgage rates to go significantly higher. They forecast the 30-year fixed rate, which hovered around 3.0 percent most of last year, to average 3.6 percent this year and 3.9 percent next year.

That is good news for affordability for home buyers!