I’ve been getting numerous questions recently regarding interest rates and how long they will stay low. I have always told clients that it is very difficult to predict rates mostly because I don’t like being wrong. There seems to be just as many people that say up as say down but right now I agree with the ones that say they are going to stay low for the next 3-6 months. Currently the national average is at 4.94% as of Friday, October 2nd.
Reuters just came out with July figures stating that out of 20 metropolitan areas throughout the country home values increased 1.6% over the month before. That was the 3rd straight month reported with an increase.
Regardless of the cities chosen those statistics are a good sign, but many people are wondering how long it will last. I can tell you first hand that a lot of the fuel behind the recent increase relates to the Federal $8,000 tax credit (ends on Nov 30th) and the ability of first time homebuyers to get financing using current low rates.
So what’s going to happen after November 30th? If the first time homebuyer tax credit ends as planned, I think it may be a factor in low home sales until spring. Locally in Denver we may be one of the cities not to have as much of a slowdown due mostly to the number of investors looking to purchase homes at below market prices. In either case, the average home price should dip over the winter months which may make it difficult to refinance because of those lower values. Currently we can use sales from the last 90 days to determine our appraised value of a home and the summer selling season has definitely been the best time of the year for sales.
With all this in mind I still strongly recommend buying a home even if they end the tax credit as long as the purchase is within your means. I recently pre-qualified a borrower for a new home and their mortgage payment is going to be less than their current rent! If you are an investor thinking of purchasing a property I would recommend getting prequalified before the top buying season arrives. If housing prices remain low over the winter and mortgage rates maintain or even drop lower it will continue to be a great time to buy.
Sincerely,
Brian Neufuss
Denver Mortgage Company
briann@denvermortgagecompany.com
(0ff) 303-446-2800
(cell) 303-250-1841
(fax) 303-963-2306
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