Once upon a time, I worked in the building materials industry when modern design first started making a come back. A tile company had done extensive studies and reported that only 10% of the
Mortgage Rates September 2014
Since 2010, 30-year fixed mortgage interest rates have ranged from a high of 5.03 percent in January 2010 to a low of 3.35percent at the end of 2012, but for the last year we’ve been bouncing between 4.46 and 4.13 percent, according to Freddie Mac. Is this the end of the super low mortgage rate trend? What can we expect in the coming year?
If this trend continues:
Hypothetically, mortgage interest rates could continue to stay in this range for the foreseeable future. A combination of a continually struggling economy, a decrease in mortgage applications, poor or stagnant job news, and mediocre GDP could keep rates at what is still a very low and reasonable point. This could mean more first-time buyers will realize that homes are affordable and purchases could take an uptick.
It could also mean that people who refinanced when rates were in the 3 percent range will sit tight and stay in their current homes, keeping the housing inventory low and suppressing the market. This will make it hard to generate new inventory, although for homes that do go on the market, prices should be high.
If rates fall:
Despite global unrest and a negative impact on the stock market, rates aren’t really falling. Most experts don’t see lower mortgage interest rates in our future anyway; the predictions have all indicated a [admittedly very slow] rising trend. But if rates did happen to fall, competition for new homes could become fierce, even in parts of the country where inventories are stable and home prices are not inflated. Agents will need to be ready to go to bat for their clients and may even need to resort to some unusual tactics such as those seen in New York and San Francisco, where competition for scarce properties is so competitive that potential buyers are writing personal letters to homeowners to appeal to their emotions, offering to clear out the junk in the basement, or agreeing to delay closing to suit the homeseller’s needs.
If rates rise:
Good news on the jobs front has not been influencing mortgage rates as economists would normally expect, but that could change, sending rates higher as consumer confidence grows. A rise in mortgage rates reduces clients’ purchasing power and can stifle the market. Homeowners who remember the historically low rates of the past few years may balk at higher rates and stay put rather than downsize or upsize, while first-time buyers may be shut out of the market altogether. Counselling potential buyers to move into the market now while rates are still extremely reasonable is some of the best advice.
Of course, there’s no way to predict with certainty which way rates will go. The economy, the end of quantitative easing, and even the fall election cycle will all impact the housing market and in turn the mortgage rates, to differing degrees. What we do know is that despite the ups and downs in the market, real estate remains a smart purchase, for both a place to live and an investment for the future. Let’s get our clients ready to build their portfolios by managing their mortgage(s)!
Debbi has over 18 years’ experience as a Real Estate Broker. She can provide top notch personalized service, whether you are a first time home buyer or looking for a luxury home or investment proper....
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