"One thing seems certain: we aren't likely to see average 30-year fixed mortgage rates return to the historic lows experienced in 2012."
– Freddie Mac, March 24, 2014
There are those that hope that 30-year mortgage interest rates will head back under 4%. Obviously, for any prospective home purchaser that would be great news. However, there is probably a greater chance that interest rates will return to the greater than 6% rate of the last decade before they would return to the less than 3.5% rate of 2012.
Freddie Mac, in one of four original posts on their new blog, explained that current rates are still extremely low compared to historic averages:
"The all-time record low – since Freddie Mac began tracking mortgage rates in 1971 – was 3.31% in November 2012. Conversely, the all-time record high occurred in October of 1981, hitting 18.63%. That's more than four times higher than today's average 30-year fixed rate of 4.32% as of March 20…rates hovering around 4.5% may be high relative to last year, but something to celebrate compared to almost any year since 1971."
If you are thinking of buying a home, waiting for a dramatic decrease in mortgage rates might not make sense. Give us a call or text today and let us help you find your new home, we will guide you every step of the way.
The big question for homebuyers is when interest rates will begin to rise to the 5% mark. The effect of a rise in mortgage rates could be a dramatic increase in the monthly mortgage payment when purchasing a home. In an article last week, HousingWire quoted two different sources regarding this issue.
Most experts are projecting that rates will rise when the Fed decides to taper the purchase of bonds which has acted as a stimulus to the housing market by keeping long term mortgage rates at historic lows.
In the article, Sterne Agee’s managing director and chief economist Lindsey Piegza pointed out:
"Federal Reserve officials said they might reduce their monthly bond buying program from $85 billion 'in coming months' as the economy continues to improve."
The article also quotes Frank Nothaft, chief economist with Freddie Mac:
“By the end of 2014, rates will probably approach and perhaps touch 5%. A reason we see the uptick in rates is that I do think some point the Federal Reserve will start to taper and scale back its very active purchase on long-term Treasuries and mortgage-backed securities.”
Rates will hit 5% sometime in 2014. It might be better to buy sooner rather than later.
Why not buy now? Buyer competion for homes during the holidays, combined with great interest rates make it a great time to buy!
If you are considering a home purchase, give us a call, text or email. Let us negotiate the best price for your new home!
?-Steve and Sandra
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The infographic below shows Fannie Mae's housing forecast as of August 2013. Home sales, prices and mortgage rates are all expected to rise.
When do you think it will be a good time to buy?
If you are considering a first time or move up home purchase, give us a call, we are eager to expalin to you the benefits of homeownership.
It may seem counterintuitive, but historically, as interest rates rise, so do homes prices. Check out the graph below. Every dramatic mortgage increase has also given rise to home prices. Waiting to buy will cost more than an increase in interest rates, the home will cost more too.