How long are these great interest rates going to stay so low? Unfortunately, not very much longer. The average mortgage rate in Denver right now is 4.75%, which is terrific. But according to Wells Fargo Securities chief economist John Silvia, interests rates will start climbing higher at the end of the June whenthe Federal Reserve will end its program of purchasing U.S. Treasurys. Silvia predicts that Treasury rates could rise by one - half to a full percentage point when this program ends.
So what does this mean to the average consumer? A lot actually. While an interest rate of 5.25% to 5.75% is still fantastic and unheard of in a historical perspective, it still makes a very large difference not only in monthly payments rising but also how much house the average consumer is able to afford. I have been warning on this blog for the past year or so about the possibility interest rates could rise significantly by the end of the year. We have been waiting for signs that they might and this is the first solid nugget I have seen that makes me think it is for real. When you have one of the largest mortgage providers in the world saying interest rates are going to rise, interest rates are going to rise.
If you are in the market for a home and looking to buy in Denver, this is important information to consider. When the rates do increase, it is going to impact what you can afford and the homes you have been eying online may no longer be realistic. It is important to consider if waiting those few extra months will really be a benefit to you or not. If you are waiting on a lease to expire, do the math. It may make more sense to get out of your lease early in order tolock in a mortgage payment that is $200 lower a month now than it will be six months from now. If you plan to be in the house for 3 or 4 years, it could really save in the long run.
And if you have been thinking of selling, but waiting for the right time, now is the right time! Whenever interest rates jump higher, buyer activity always picks up since smart buyers don't want to risk losing out on great interest rates. That means more motivated buyers out looking. Is your house going to be one they are looking for? And are you going to sell in time to take advantage of the great rates on the buying side? Lots of questions to consider. As always, let me know if I can help find those answers you are searching for.
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