NEW YORK (MainStreet) As interest rates continue to climb up slowly, consumers are facing more costs when they incur additional debt.
The Federal Reserve announced in December that it would start to purchase $10 billion less of bonds each month starting this January. The tapering of the Fed's quantitative easing program artificially suppressed interest rates.
Mortgage rates will start to "move higher in a slower, steadier fashion than 2013," said Bankrate.com senior financial analyst Greg McBride. The current rate for a 30-year fixed mortgage is 4.55%, according to Bankrate.com.
Mortgage rates are likely to move past the 5% mark during the first half of 2014 and could reach 5.5% in the second half of the year, he said.
"It was inevitable," he said. "This is going to be a year where mortgage rates increase, but at a modest pace."
Mortgage rates remain low compared to the last several decades. In the 1980s, mortgage rates reached the mid-teens, however the average rate over the past 30 years is 7.5%, said McBride.
Consumers who are planning to purchase homes should not let the slight increase prevent them from buying a house or condo.
"I wouldn't let the rise in mortgage rates deter you," he said. "We're still at very attractive levels. It is important to be on sound financial footing and have solid credit before you purchase a house."
The economy should continue to rebound steadily in 2014, said Tim Lucas, editor-in-chief of MyMortgageInsider.com. Mortgage rates have been artificially low because of the efforts of the Federal Reserve.
The average 30-year fixed mortgage rate could reach 5.25% by mid-2014 and closer to 5.5% by the end of the year, he said.