Mortgage rates shot up after the Fed suggested a potential pullback on quantitative easing, but don't expect them to soar in the second half of 2013.
Intead, analysts see gradual growth when it comes to mortgage rates.
The market is seeing a lot of volatility due to the Fed's talks of tapering, said Leonard Kiefer, deputy chief economist with Freddie Mac.
Rates will likely trend up, but won't spike, although there might be week-to-week changes, Kiefer added.
"I don’t think anyone expected rates to jump by a full percentage point like they did in May," Polyana da Costa, a mortgage analyst and reporter with Bankrate (RATE), said. "I think we can safely say they will be higher than they are today."
Looking ahead 6 months to the end of the year, Kiefer said Freddie Mac is projecting rates to slightly increase to 4.6%.
Rates should remain flat or barely higher than where they are today, Bob Walters, chief economist for Quicken Loans, said. He projects rates will hover around the 4.5% to 4.75% point by the end of the year.
The surge in rates was a big overreaction to QE tapering, which was overblown, John Walsh, president and CEO of Total Mortgage, explained. Now that the market knows what to expect, however, da Costa said it's unlikely rates will soar like they did over the past two months.
"There is no reason for rates to rocket too much from where we are today," Walters said. "While there is always risk, there is not a ton of it."
A year from now, rates are expected to hit 5%, which is not even a full percentage point above current rates, according to Freddie Mac. Currently, rates are highly dependent on the labor market. "If you were to see jobs rapidly increase, rates would dramatically rise. That is a huge driver of what may happen," Walters said.
The job market, the economy, Europe and four or five other changes that we are not anticipating could happen over the next year, Walsh said.
"The underlying basis of this is that the economy and the housing market is still at a fragile state right now. We are not out of the woods yet," he added.
Ultimately, we will not go back to what everyone is used to; I think those days are gone, da Costa said.
"The market will not revisit the high 3% rate. We would have to get a surprise," Walters concurred.
"Rising rates will push some people over the edge. It will definitely slow some of the activity in home sales, but we still think rising rates are largely a function of the economy improving," Freddie Mac's Kiefer added.
People need to look at the situation of where we are relative to history, he said. "We have low rates and affordability is still near record highs. From a broad historical perspective, we are still pretty low for rates."