Since the beginning of 2013, mortgage interest rates have been slowly moving upward. Not a lot and not everyday, but the trend is definitely upward. No one expected rates would stay as low as they were forever, but the past month has been a reminder that rates will increase.
According to Freddie Mac's weekly mortgage survey, last week's average 30 yr fixed mortgage rate was at 3.53% nationwide, that is about .25% higher than November's all time low. According to the Mortgage Banker's Association, we are heading higher and soon.
In the MBA's annual rate forecast, they are projecting interest rates to be about 4.40% for a 30 year fixed rate mortgage sometime this year. That will put interest rates a full point higher than current rates in January 2013 and definitely affect your homebuying power.
The difference between 3.53% and 4.40% on a $250.000 mortgage is $125/month. This may affect your ability to buy a home that you want. When you add the increases to FHA mortgage insurance and interest rates increasing, it means now is a fantastic time to buy a new home!
Home prices are starting to increase and I have been seeing multiple offers on many of the homes my buyers want. As home prices increase and rates increase, it will affect how much you can buy.
We don't know what will really happen until it happens. A year ago I expected interest rates would have been higher at the end of 2012, instead they dropped to historic lows. The only thing we definitely know is that interest rates are higher today than they were at the end of 2012.
If you are thinking about buying, now truly is a great time to do it. Interest rates are still low and home prices are great. As this year goes on, we do expect both prices and rates to increase.