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Our Sources Say...Rates are going up in 2010! How will this affect buyers?

Our sources say rates are going up in 2010!  How much and when?  According to experts in the mortgage industry, rates will start the year just above 5% and will gradually climb into the 6 1/2 range as the year progresses.  Why?  One of the main reasons is the expiration of the Federal Reserves Mortgage Backed Security Purchase Program at the end of March.  This program was instrumental in keeping rates artificially low in 2009.  So as the program winds down, rates will likely edge higher as we get closer to summer. 

For buyers, this means their dollars will buy less house as the rates inch upward.  How much does a rate change really affect a monthly payment?  Here's an example from the e-Book, Only 8 Steps to Home:

 

Interest rates examples

For the last twenty years, the mortgage interest rate averaged approximately 8 percent in the United States.  For the same $1000 monthly payment, a buyer can afford $30,000 more house at a 6% rate vs 8%. 

Rates aren't expected to increase quickly, but they will most likely be volitile throughout 2010 with waves of ups and downs and a trend that is clearly up.  So if you're considering purchasing a home, now may be a great time to serioYour First Homeusly consider taking the plunge.

Visit our website to download the e-Book "Only 8 Steps to Home" or see how to get your own print copy of "Your First Home, The Proven Path to Home Ownership".  

 Other e-Books are also available:

"Your Handbook to Home Ownership"

"The Skinny on First Time Home Buyers"

"$8000 Closer to Home"

 

 

Unless otherwise noted, blogs are authored by Tonda or Steve Hoagland

 

 

Comment balloon 2 commentsTonda & Steve Hoagland • January 04 2010 03:51PM

Comments

Very interesting post. While it will have a impact on purchase higher rates and stronger lender requirements will have a big impact on the refi market.

Thanks

Tony

Posted by Tony Grego, 317-663-4173 #1 Trade Association for Alternative Inv (REISA - 317-663-4173) about 8 years ago

Hi Tony,

How is your business here in Indy?  We don't profess to be rate experts, but I continue to get updates from different lenders warning about the rate increases coming in 2010 and decided to pass the info along to buyers.  I'm sure higher rates will have a detrimental affect on the refi market as well.

Take care.

Posted by Tonda & Steve Hoagland, Real Estate - Greenwood Homes for Sale - Central I (Keller Williams Realty) about 8 years ago

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