The real estate market is constantly fluctuating, whether it’s home prices, new construction starts or mortgage interest rates. Currently, a number of lenders have experienced rate decreases, yet higher mortgage rates are projected for the remainder of 2014. These rate increases are not expected to hamper the market when it comes to recovery.
Kiplinger reports they expect mortgage interest rates to rise on conventional and adjustable-rate mortgages alike by the end of the year. This could mean that interest rates on 30-year fixed rate mortgages could rise from their current rate of around 4.4% to between 5% and 5.5% by the end of the year. As a result, borrowers should lock in their mortgage interest rate when applying for a loan in order to protect themselves from future increases.
In the recent past, mortgage interest rates on certain loans have decreased, yet others have seen rate increases. Loansafe reports that 30-year fixed rate mortgages (FRMs) decreased at Bank of America, Citi and Chase under their purchase programs. Rates also decreased under the refinance program at Bank of America and Chase. Ten, seven and five-year adjustable rate mortgages (ARMs) saw rate decreases at Citi under its home purchase program. Five-year ARMs for Federal Housing Administration (FHA) loans also decreased under the refinance program at Wells Fargo.
Among the increases included five and seven-year adjustable rate mortgages at Chase under their refinance program. These increases occurred despite the fact that adjustable rate mortgages at other lenders actually decreased. Ironically, ARM rates on jumbo loans actually decreased at Chase despite adjustable rate increases for those refinancing smaller loans.
These numbers show that there are huge differences in mortgages rates between various lenders. As such, borrowers should compare rates carefully amongst the different lenders in order to ensure they are getting the best deal possible. Whenever possible, they should also stick with conventional 30-year fixed rate mortgages rather than opting for a loan with adjustable rates.
Since rates are likely to increase in the coming months, it also makes good sense to go ahead and buy now before rates get even higher. Although mortgage rates are not expected to skyrocket, even slight increases could make a significant difference in the amount of a monthly payment. As such, buyers who have been waiting for the right time to enter the real estate market could just discover that the time has finally arrived.
If you’re considering buying and want to discuss how much home you can afford and what type of loan might be best for you, contact Park Avenue Properties of Colorado Springs today!