Will Rates Stay Low?
According to the latest projections from the National Association of Realtors®, interest rates may gradually rise out of historic lows as we move through 2012.
The NAR reports that current surveys reflect the tight credit conditions. They report that recent buyers are staying well within their means, with higher incomes and higher downpayments.
Nearly two-and-a-half years since the end of 'the great recession,' the economy continues to operate well below its potential.
Tight mortgage credit conditions have been holding back home buyers all year.There is a sizable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can't continue indefinitely. This demand could quickly stimulate the market when conditions improve.
It is this improving jobs markets that many analysts are waiting for. The unemployment rate should decline, to around 8.7 percent by the end of 2012.
Around this same time, experts expect that mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012.
This is still an incredibly low rate and many experts feel that housing market, while still struggling, will improve throughout next year and after. In fact, the NAR expects new home sales to reach 372,000 next year. Existing home sales could fare just as well, rising 4 to 5 percent in 2012.
Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year. Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more home buyers to take advantage of current opportunities." The bottom line is that the housing market should improve over the next year and along with that improvement will come higher interest rates. Buyers interested in making a move should take head of today's historically low rates and high levels of affordability.
If you would like to know more about current interest rates, please call me and I can discuss the options with you.
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