The big news in the last month has been the surge in interest rates for home loans. Across the board, rates for conventional, FHA, VA and any other type of loan you would get to buy a home have increased about .5%, reducing your buying power significantly. One of the most credible sources for industry insight is Lawrence Yung, Chief Economist for the National Association of Realtors and hereâ€™s what he has to say:
â€œMortgage ratesÂ will continue to rise. They will probably be near 5% by this time next year, compared to the 3.5% average of the past 12 months. The rates will be even higher in 2015 and 2016. Certainly, rising rates are bad news for buyers and some potential homebuyers will be pushed out of the market.â€
So what does this mean for todayâ€™s home buyers who missed out on the record low rates? It means theyâ€™ve lost a lot of buying power and they may lose more in the near future if interest rates continue to rise. The trouble is that no one can predict with cer-tainty what interest rates will do. But for the first time in a very long time weâ€™re seeing a sizeable bump in rates and predictions of future rises, so itâ€™s critical to understand how this will affect your ability to purchase a home.
My advice to a buyer is if youâ€™re serious aboutÂ buying a home, it might be time to get one locked up with a sub 4% interest rate to hedge against future rate rises. It certainly doesnâ€™t mean you should foolishly buy a home that does not perfectly fit your needs. But we are witnessing the interest rate screw tightening as the low-rate party may finally be coming to an end. So if youâ€™ve been kicking around the idea of looking for a home, now may be the time to jump off the fence and get into the game before itâ€™s too late.
Your Castle Real Estate