Say goodbye to ultra-low mortgage rates.
This article from CNN Money is a reminder of why NOW is the time to buy!
In the past month, rates have been on the rise and they are expected to continue to climb.
This week, the average rate on a 30-year fixed-rate mortgage jumped
another 10 percentage points to 3.91% and are up from 3.3% in early May,
according to mortgage giant Freddie Mac. Meanwhile, those seeking a
15-year loan received an average rate of 3.03%, up from 2.56% -- a
record low. "It's unlikely that rates will ever be that low again," said Doug Duncan, Fannie Mae's chief economist. Those who didn't take advantage of record-low rates have missed the boat -- at least for now. Here are three reasons why. Related: Best deals on real estate
The Fed is going to stop bolstering the housing market. The
Fed has kept rates at rock-bottom levels by buying up to $85 billion a
month of Treasury bonds and mortgage-backed securities. That has enabled
lenders to sell mortgage loans at low interest rates and recoup their
money immediately -- plus profits. "Up until recently,
expectations were that the Fed would begin to taper purchases of
mortgage-backed securities (MBS) and Treasury bonds late in 2013, but
that timeframe appears to have moved to September, possibly sooner,"
said Keith Gumbinger, vice president of HSH.com, a mortgage information
company. Related: McMansions are making a comeback
If the Fed stops purchasing the securities, private investors will have
to pick up the slack. For investors to do that, the loans will have
offer a better payoff. And that would mean raising rates for borrowers,
said Duncan. The economy is no longer reeling. During
the recession, the Fed lowered its short-term interest rate to near
zero in order to stimulate the economy. But now conditions have improved
considerably since the economy emerged from recession four years
ago. As the economic revival gains traction, it is creating a tailwind
for interest rate increases, according to Gumbinger.
happen when the economy is in distress. But now, the market believes the
economy is getting stronger, said Wendy Cutrefelli, a vice president in
the Mortgage Banking Division of Bank of the West. Quiz: How much do you know about mortgages? http://money.cnn.com/2013/06/06/real_estate/mortgage-rates/