It is a fact that mortgage rates have been very low for some time now – last week they hit a 50 year low. Today’s rate for a conventional / FHA mortgage are 4.75%, and 4.875% for USDA and VA loans (subject to credit / employment history). But how long will they continue to be this low?
According to a chief economist at Pierpoint Securities LLC, the low mortgage rates may not be around long.
There are signs of improving economic conditions, which could lead the Federal Reserve Chair Ben Bernanke to raise key interest rates and drive up mortgages.
Another fact is that there is evidence that people are paying their bills on time and fewer banks have been tightening their lending standards in the last month .
People wonder if the market will continue to fall in price? The market has definitely stabilized with growth seen in many areas. So if you think house prices may still drop, a rise in interest rates will counteract any drop in price. Here is an example
Say you qualified today for a property at $400,000 on a 30 year loan, if the rate increased by 0.5% tomorrow, that would give you $25,000 less in purchasing power, if the rate increased 1%, this would mean $50,000 less in purchasing power.
So grab a great rate while rates are low and prices are stabilizing !!