Stimulus Package Expecting to Taper in 2014 - Mortgage Interest Rates Will Rise

Reproduced with the permission of Mortgage-X.com

The Fed has officially announced that their stimulus package will be pulling back slightly come 2014, according to the KCM blog.  The stimulus package definitely helped the housing market nationwide as mortgage interest rates dropped and remained low, but with this new pull back, buyers can expect these low mortgage interest rates to rise.

What do the rising mortgage interest rates mean for buyers?

The earlier in 2014 buyers can make the move, the better.  The rates should increase incrementally as the year progresses.

Lawrence Yun, the chief economist at NAR, agrees with this philosophy, stating that sellers who are planning to move to a better neighborhood or into a better home should "realize that it could be more challenging a year from now."

The average 30-year mortgage rate, according to Yun, is currently around 4.3%, but could move as high as 5.5% next year.

Buyers note: Just because rates are rising, does NOT mean home prices will drop

There are some reports on the market that claim housing prices will drop as a result of this anticipated mortgage rate rise in 2014.  While nice in theory, there is no evidence of this ever having occurred in the past.  Here is a graph from KCM blog denoting such:

In short?

Buyers, the waiting game will not be in your favor, unfortunately.  If you are thinking of moving up to a better home, better neighborhood, or even thinking of buying your first home, the time to do it is NOW.  As 2014 progresses, buyers that wait will notice their budget will get them less than it would have if they had purchased earlier in the year.

Questions? Want to know how to start your own process?  Don't hesitate to send me an email or give me a call, and I'll be happy to help.