Mortgage interest rates for 30-year-fixed mortgages recently hit 4.25% as predicted earlier this year. This is still a low rate that will not last forever, making now the time to buy or sell a home in the Pioneer Valley. Although mortgage rates have risen, they are still low when compared to what they were just a few years ago. Just prior to the mortgage crisis, the average interest rate for a 30-year-mortgage was 6.5%.
If you are buying a home, low interest rates allow you to afford more; if you are selling a home, you will be able to get more for your home now than when mortgage rates rise further.
The reason for the climb in interest rates is the Federal Reserve’s announcement to start scaling back purchasing $85 billion dollars in treasury bonds and mortgage-backed-securities a month, a process known as quantitative easing, by mid-2014 when the unemployment rate is thought to be at 7%. The Fed chairman, Ben Bernanke, made the announcement earlier this week, but interest rates started rising when he hinted at it in May.
It is quantitative easing that is keeping mortgage interest rates at super low levels of 3% and has helped the real estate market recover.
However, analysts say that mortgage rates will remain stable through the second half of 2013, despite the fact that it seems that they rose fast in recent weeks.
“Mortgage rates tend to move a lot in a short amount of time, then do nothing for a longer period,” Bankrate.com senior financial analysts told The New York Times. “Rates will stabilize and potentially pull back as Bernanke’s words fade and economic reality sets in.”
If you are planning on buying or selling a Pioneer Valley home, make your first call to Michael Seward at 413-531-7129.