Can Rates Stay This Low??
Of course there are a lot of factors to consider when trying to decide whether to make a move – job security, location, savings, etc. But the interest rate you pay on your home mortgage has a direct impact on your monthly payment…the higher the rate, the greater your payment will be. That is why it is important to look at where the experts believe rates are headed when you’re deciding to buy now or wait until next year.
Where Rates Have Been & Where They’re Headed
I keep saying to people who ask that these rates can’t stay low forever – they eventually have to go up. I actually thought they would this past summer, but with the Euro issue in Europe and the election here in the U.S., I think the powers-that-be decided that they couldn’t raise rates. The 30-year fixed mortgage rate has actually fallen half a percentage point since the beginning of the year and has remained at or below 3.5% for the last 11 weeks, according to Freddie Mac’s Primary Mortgage Market Survey.
The chart below shows how far rates have fallen this year (on the left in blue), and uses an average of the projections from Freddie Mac,Fannie Mae, the Mortgage Bankers Association and National Association of Realtors (on the right in orange). As you can see, interest rates are projected to increase steadily over the course of the next 12 months.
How Will This Impact Your Mortgage Payment?
Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.
According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.0% over the last year and are predicted to be 5.4% higher next year.
If both the predictions of home prices and interest rate increases become a reality, families will wind up paying considerably more for their next home.
Even a small increase in interest rate can impact your ability to buy the home you want. With rates being what they are today, you have a lot of buying power to get the home you really want! If you have any interest in buying a home, let’s talk, because now might be the perfect time.