Surf’s up:time to ride the home-buying wave
COMMENTARY | Jumping into the housing market is a lot like trying to catch the next big wave: You never know if you’re going to be able to ride it through successfully or get caught in the undercurrent and wipe out.
These days, news of rising mortgage interest rates combined with a tight housing market and ever-increasing home prices are keeping many standing on shore, as they try to figure out the best time to take the plunge.
Rates on the rise
Let’s start with rising mortgage interest rates. They are not just up but have risen a full percentage point above recent record lows and are now in the mid-4 percent range. Although still lower than they were between 2005 and 2007, when rates were in the 6 percent range, the recent jump could slow down home sales — and with it a full housing recovery — by pricing potential homebuyers out of the market and keeping others from refinancing.
Freddie Mac has projected the average rate on a 30-year fixed mortgage to stick around the 4 percent mark during the second half of this year, but get closer to 5 percent by the end of 2014.
One of the reasons for this increase came earlier this month when Federal Reserve Chairman Ben Bernanke started talking about winding down quantative easing or, in layman’s terms, tapering off on the bond-buying program that has pumped billions of dollars into the economy in an effort to help the recovery move forward.