How Long Will Mortgage Rates Stay This Low?

Can you imagine interest rates at 18%? That’s where they were in 1981.
That’s a $2,260 monthly payment on a $150,000 home. Wow! The same home today would cost about $800 a month. What a difference the interest rate makes.

A key concern for economists right now is interest rates and how long they will remain this low? The consensus is clear. Interest rates will go up and go up soon!

“MBA has been predicting mortgage rates would rise, maybe even reaching around 5.8% by the end of this year, Fratantoni said. And experts predict the rates will range around 6% in 2011.

Mortgage rates can really impact consumers by limiting what they can pay for a home.

Take the $165,000 median home price of existing homes sold in February. A buyer with a 20% down payment would pay just over $725 a month in mortgage payments for a 30-year fixed loan at today’s rate.

Raise that rate by a half point, and the same buyer would only be able to afford a home worth $156,000 to keep payments near the $725 a month level.” CNN Money

So what to do?

If you’ve been thinking of buying a home in 6 months to a year from now, then you might want to reconsider and go for it sooner rather than later. As they say time is money, in this case, literally.

Refinancing is also an option you may want to explore. I recently recommended I client of mine speak with my loan officer because he had purchased a home when rates were at 6.5%. He’s now saving $300 every month.

For more information on the future of interest rates and how you may be able to take advantage, feel free to contact me and I’d be happy to point you in the right direction,