Mortgage rates and home prices are on the rise, and some home buyers who were waiting around for the housing market to reach bottom are realizing now they may have missed the boat.
Mortgage rates are inching up, with the 30-year fixed-rate mortgage averaging 3.91 percent last week — up from 3.3 percent in early May, according to mortgage giant Freddie Mac.
“It’s unlikely that rates will ever be that low again,” says Doug Duncan, Fannie Mae’s chief economist.
The Fed has been keeping interest rates at record lows by buying up to $85 billion a month in Treasury bonds and mortgage-backed securities, which has helped bolster the housing market.
“Up until recently, expectations were that the Fed would begin to taper purchases of mortgage-backed securities and Treasury bonds late in 2013, but that time frame appears to have moved to September, possibly sooner,” says Keith Gumbinger, vice president of HSH.com, a mortgage information company.
As the economy continues to gain traction, interest rates are expected to continue to increase, Gumbinger says, since low rates often are associated with a distressed economy.
But even if mortgage rates move up a percentage point or two, housing experts note that mortgage rates will still be low by historical standards.
“The 30-year [mortgage rate] hit a 37-year low in 2003 at 5.23 percent,” Gumbinger says. “That was the previous low-watermark prior to this financial crisis, and it’s likely we will move closer to that mark as we grind forward.”
Source: “Why You Missed the Boat On Record-Low Mortgage Rates,” CNNMoney (June 6, 2013)