The Ups and Downs of Mortgage Rates

For the past few years, mortgage rates have reached - and remained at - historic lows.  Between the low rates and federal stimulus incentives, millions of first-time buyers became homeowners and existing homeowners were able to move up.

That was then.  What's going on now?  Like the stock market, it depends when you check.

The good news is that 30-year fixed rate loans are still very low:  4.1% according to USA Today on Thursday, October 31.  Yes it's a little higher than last year, but still a bargain compared to, for example 6.4% in October 2008, as reported by Freddie Mac.  When I bought my first house in 1995 my rate was 8.125% and THAT was considered a deal back then! My mom reminded me about when she was selling real estate earlier in her career and people were paying 18%!

The more sobering news is that rates for 30-year, fixed rate loans are expected to rise in 2014.  The Mortgage Bankers Association predicts 5% next year, and 5.3% by early 2015.  None of this should come as a surprise, and buyers should keep the prospective hike in, well, perspective.

Rising interest rates are a sign of a strengthening economy.  You'd be buying a house in a more economically stable environment, which is good news.  The expected rise is slow and measured, and rates will remain a relative bargain.

The best person to talk to about ramifications of rising mortgage rates is a knowledgeable agent with a handful of local, honest, reputable lenders.  Your agent can tell you about lending conditions for your area, and how interest rate fluctuations may affect your options.  If you are thinking about buying a home, we'd be happy to take care of your needs and if you are not in our market area, click here and tell us how we can help you.  We'd be happy to find the most knowledgeable and experienced RE/MAX agent in your area.

This article was brought to you, in part, by RE/MAX.