Are mortgage interest rates on the rise in Denver or are they going to stay this low forever? While it would be nice to have 4% interest rates for years to come, the reality is unfortunately, not that realistic. In a report out today from the Wall StreetJournal, it appears that we have bottomed out and rates are on the rise.
According to the article, The Mortgage Bankers Association predicts rates on the 30-year fixed-rate mortgage will average 4.4% in the fourth quarter of 2010, increasing to a 4.7% average in the first quarter of 2011, and climbing to 5.1% by the end of next year. That is barring any "blockbuster" announcement from the Federal Reserve next month, said Jay Brinkmann, chief economist of the MBA.
So how will this impact the market? The MBA forecast predicts home sales will rise slightly next year, after dropping in 2010 from 2009 levels. Sales of existing homes will finish 2010 about 8% lower than last year, but sales should rise 2% next year and 16% in 2012. And sales of new homes will finish this year 13% lower than 2009, but sales should rise from that low base by 20% next year and 40% in 2012.
With an expected increase of the average rate from 4.25% to 5.1% next year, it certainly doesn't make much sense why they would expect sales to increase. However, if you look at historical sales models, whenever rates start to rise, sales do to. My theory on this is that as rates start to increase, those that have been waiting for the bottom to hit finally realize the low rates aren't going to last forever and that they better take advantage of them while they are still historically low.
So if you have been thinking of buying, but waiting to see if rates go lower, now might be as good of time as any to get moving. I was quoted 3.75% on a 30 year fixed just yesterday. I don't see how rates will ever get lower than that, so I am going to take advantage and buy now before rates start creeping up once again.
Socials