The answer depends on where you’re buying. Interest rates aren’t expected to rise much this year, but the same cannot be said for prices.
Economists in recent interviews agreed that the rate for a 30-year fixed mortgage was unlikely to rise much above 4 percent this year. House prices, however, are rising nearly everywhere, and nowhere as rapidly as in the Sunbelt states.
The national average for a 30-year fixed-rate mortgage was 3.52 percent, according to Freddie Mac’s weekly survey released on Thursday, up from 3.51 percent the previous week. The average rate for a 5/1 adjustable-rate mortgage was 2.63 percent, up from 2.61 percent.
Despite an upward trend over the last few months, the 30-year rate is unlikely to rise beyond 3.75 percent “for the foreseeable future,” said Keith T. Gumbinger, the vice president of HSH.com, a financial publisher.Stan Humphries, the chief economist of Zillow.com, agreed. Given the Federal Reserve’s continuing effort to keep rates down, and barring unexpectedly fast economic growth, he said, “it feels like we’re in an environment for the next year, year and a half of really low rates.”
Homeowners hoping to refinance a loan are likely to be the most sensitive to incremental upticks in what are still attractive lending rates, said Jed Kolko, the chief economist of Trulia.com. Indeed, the Mortgage Bankers Association predicts that by year-end, refi volume will shrink to 40 percent of all mortgage originations, versus 75 percent in 2012. Another association prediction for year-end: the 30-year rate will be about 4.4 percent.
Buyers, on the other hand, may be in a stronger position. “When rates are rising, it’s because the economy is improving,” Mr. Kolko said, “so buyers are in a better position to put down the down payment and qualify for a mortgage.”
For buyers able to get financing, “getting in a little earlier would be preferable before prices and rates rise too much,” said Lawrence Yun, the chief economist of the National Association of Realtors.
That is particularly true for Federal Housing Administration loans. Mortgage insurance premiums on these loans will rise by up to 0.10 percent of the loan amount as of April 1. To avoid a higher premium, borrowers would need to apply and obtain a case number before then.
In markets where housing inventory is tight, Mr. Yun said, buyers will have to make a trade-off: act right away to get the best financial deal, or wait for more choices and perhaps pay a bit more.
According to data gathered by Zillow, residential prices are rising at double-digit rates in sections of California, and the Phoenix and Las Vegas areas. As of January, the median sale price was up 14 percent over the previous year, to $448,500, in the San Francisco Bay area, and 23 percent, to $169,200, in the Phoenix market. “The markets that are more Midwest and Northeast are seeing much lower growth rates,” Mr. Humphries said. “That’s partly because the buyer profile in the Sunbelt markets looks considerably different, with a lot of retirees, second-home buyers, and international buyers.”
In much of New York, New Jersey and Connecticut, buyers need not be so concerned about beating price appreciation. All three still have a backlog of foreclosures yet to make their way through the courts. A “looming shadow inventory” could keep prices fairly flat this year, with Manhattan the exception, Mr. Yun said.
Article source: http://www.nytimes.com/2013/03/10/realestate/the-right-time-and-place-to-buy.html?partner=rss&emc=rss
