Interest rates ARE interesting

Good day!

Today we are going to talk about the recent rise in mortgage interest rates. First, take a look at this chart that shows the history of 30-year fixed-rate mortgages from January 2012 until July 2013:

August2013-20

We can see that most of last year interest rates were in the 3% range. This year began in the three’s, but then after a brief dip in May, the numbers started to climb and reached the 4% range by June. From there, the rates continued to climb to where they are today, around 4.7% (the chart only goes to July).

Let’s break down this year further. Look here:

August2013-21

As you can see, this chart is broken up into three different colored bands. The bottom red band represents the range of 3.25 to 3.75% in interest rates for a 30-year fixed-rate mortgage. Usually interest rates bounce around bands, so that’s why you see variations within each color block. For about the first six months of 2013, the rates bounced around that first bottom red band.

Then it jumped into the blue band (3.75% — 4.25%). People assumed that the rates would bounce around that band for a while, BUT they were only there for about a month before they jumped yet again to the green band (4.25% — 4.75%). This caused some hysteria as people were concerned about the jump.

Going forward, let’s see what the analysts say:

August2013-22

According to Fannie Mae, the National Association of Realtors, Freddie Mac and the Mortgage Bankers Association, around this time next year we are going to be in the next band (not pictured) in the range of 4.75% to 5.25%!

So, we know from the earlier posts that housing prices are on the rise (albeit, next year they will be moving at a slower pace) and interest rates are headed upward. Taking this information into consideration, it seems that now is a good time to consider buying a home!

Tomorrow we are going to see what the cost might be of waiting a year to buy.

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