Category Archives: Mortgage Info
New Year – New Mortgage Rates? – 2015 Latest Predictions
Rates can not be predicted with 100% accuracy but most experts agree that rates will trend upward in 2015.
Filed under Home Buying (For Buyers), Mortgage Info
Will an Increase in Interest Rates Crush Home Prices?
There are some who are calling for a substantial drop in home prices should mortgage interest rates begin to rise rapidly. Intuitively that makes sense. The cost of a home is determined by the price of the home and the price of financing that home. If mortgage interest rates increase, less people will be able to buy. The logic says prices will fall if demand decreases.
However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased.
Here is a graph showing what actually did happen:
We will have to wait and see what happens as we move forward. But, a fall in prices should rates go up is not guaranteed.
Mortgage SnapShot
Whats Going On In The Mortgage World?
IN A NUT SHELL: Availability of mortgage credit has increased, The minimum credit scores needed to qualify for a mortgage has decreased and Mortgage Rates are Predicted to Rise!
Is This The Beginning of “The End Of The Low Mortgage Rates”?
During the financial crises The Fed began buying long-term securities — Treasury bonds and mortgage-backed securities — which helped reduce long-term rates, especially mortgage rates. The Federal Reserve has just announced that they will end bond purchases but pledged to keep it’s benchmark short-term interest rate near zero for a “considerable time”.
Filed under Home Buying (For Buyers), Mortgage Info
Freddie Mac: Doubtful Rates Will Return to Recent Lows
Crew on March 26, 2014
“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 theless 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.
Money Magazine: Buy Now Not Later
From; KCM Crew 3/24/14
We have often suggested that potential home buyers consider rising interest rates when thinking about the true cost of a home. Remember, cost is not determined by price alone but by price and mortgage rate. The longer a buyer waits, the higher the mortgage payment will be if rates continue to increase (as is projected by Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Bankers Association).
Money Magazine, in its latest issue, agreed with our analysis as they also warned their readership of the same ramification if they waited to buy a home.
Here is what they said:
“BE MINDFUL OF RATES. The average interest rate on a 30-year fixed loan is predicted to climb from the current 4.4% to 5.3% by the 2015 spring buying season, according to Freddie Mac. For a $250,000 loan, that means that a borrower who waits would pay $136 more per month and an additional $49,090 in interest over the life of the loan. Will you need a big loan? Better to act soon before rates tick up.”
And the monthly increase Money mentioned did not take into consideration that prices are also projected to increase over the next year. Here is what the additional cost would be if prices rise by the 4.5% projected by the latest Home Price Expectation Surveyand interest rates go to 5.3%.
Borrowers Dodge Higher Mortgage Rates!
The Fed’s actions resulted in NO mortgage rate hike. Rates are still at historic lows…at least for now!
Borrowers dodged higher rates for now; The Fed could have caused rates to shoot up this week if it had announced the tapering off its bond-purchasing program Wednesday, when the Federal Open Market Committee wrapped up its two-day meeting. Instead, the committee “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases,” the Fed’s statement reads. The Fed will continue to print $40 billion per month to purchase mortgage bonds and $45 billion per month to buy longer-term Treasury securities. These purchases have long kept mortgage rates artificially low. But once the Fed cuts that stimulus, mortgage rates will likely rise rapidly.
Filed under Mortgage Info
Real Estate Matters in Charleston SC - Gena Glaze 