Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Along with Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors are all calling for mortgage rates to continue to rise over the next four quarters.
This has caused some purchasers to lament the fact they may no longer be able to get a rate less than 4%. However, we must realize that current rates are still at historic lows.
Here is a chart showing the average mortgage interest rate over the last several decades.
Though you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago; a lower rate than your parents did twenty years ago and a better rate than your grandparents did forty years ago.
The real estate market has rebounded. So much so that there is a short supply of available homes for sale on the market. Especially for lower priced homes.
How does real estate help our economy?
The increased sales mean increased sales prices. Increased sales prices mean increased values for homes. Even those who aren’t selling their homes will realize the increased values. This in turn boosts consumer confidence and consumer spending.
NAR compiled data from research conducted by the Bureau of Economic Analysis & Macroeconomic Advisors on the economic impact of a home purchase.
After reviewing the data, they concluded that the total economic impact of a typical home sale in the United States is an astonishing $52,205.
The more homes that are sold the better the economy. The better the economy the better it is for everyone.
How does this help you?
Homes listed in todays market go fast! And with mortgage rates still low this may be the time to upgrade your current home to a bigger house or one in a nicer location.
Give us a call and we will happy to show you what your options are.
“January housing data can be volatile because of seasonal influences, but low housing supply and the ongoing rise in home prices above the pace of inflation appeared to slow sales despite interest rates remaining near historic lows,” said NAR Chief Economist Lawrence Yun. “Realtors are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.”
The median home sales price in January was $199,600, up 6.2 percent from January 2014.
The share of first-time buyers fell to 28 percent, the lowest percentage since last June.
“Although sales cooled in January, home prices continued solid year-over-year growth,” Yun said. “The labor market and economy are markedly improved compared to a year ago, which supports stronger buyer demand. The big test for housing will be the impact on affordability once rates rise.”
Mortgage interest rates have stayed in a narrow, very affordable range all year.
After three weeks of trending higher, mortgage rates have once again turned lower.
The 30-year fixed-rate came in at an average of 4.28%, according to Freddie Mac’s weekly survey. That’s down from 4.37% last week.
Meanwhile, 15-year fixed rates, popular with homeowners refinancing their loans, were at 3.32%, down from 3.39% last week.
Rates have been affordable all year — from a low of 4.23% to a high of 4.53% — as the economic recovery has failed to pick up much steam.
“Mortgage rates were down this week as real GDP was revised downwards to 2.4% growth in the fourth quarter of 2013,” said Frank Nothaft, Freddie’s chief economist.
The brutal winter weather is also having an impact, according to Keith Gumbinger, vice president of mortgage information firm HSH.com.
“For the moment, mortgage rates are holding nearer to 2014 lows than highs,” he said. “As the effects of winter weather begins to wear off, and if a peaceful solution can be found to quell the unrest in the Ukraine, mortgage rates can be expected to firm up again.”
Cheap mortgages are a bonanza for buyers. At 4.28%, mortgage payments on a $200,000 loan come to just $987 a month. At a historically more normal (but still reasonable) rate of 6%, the payment would be about $1,200.