U.S. Real Estate: 2013′s Mortgage Trend
With the economy recovering from its recent downturn, and the spring season coming on, it’s no surprise that many people are curious as to their current prospects for buying a home.
After a record low in November of 2012, the average mortgage rate has seen a gradual increase to its current rate of 3.51 percent. Coupled with the 0.8 points paid, it would seem that with mortgage rates being lower than what they were at this time last year, now is the time to act.
With house prices increasing since the financial meltdown of 2008, and the number of homes available steadily declining, the house market seems to be in a recovery period of its own. Luckily, these factors indicate that the housing market is strengthening itself, which is good for any hopeful buyers out there.
One of the big deciding factors on the housing market is the current state of the economy. While warning signs seemed to indicate a possible depression just a few years back, the United States has been modestly recovering for quite some time now. While economists normally expect a much larger rebound after such a recession, the fact that United States is recovering at all is a positive note. This is especially true when considering other countries that are experiencing a similar recession, but lack the same growth that the United States has had. As the United States continues to strengthen itself, so too does the housing market.
When taking data from last year, it turns out that the number of housing sales has gone up since last January by nearly ten percent. In fact, the United States has experienced one of its lowest housing supplies since April of 2005. These factors have contributed to an increase in the average house price, which has gone up by over twelve percent since January of 2012. It would appear that not only is this the time for buying a house, but that mortgage rates and financing availability have reached acceptable levels for interested buyers.
What about construction on new homes? As it turns out, the number of homes currently being constructed has seen a rise of almost thirty percent since 2011. This is exciting news, as the United States has not seen levels like these since as far back as 2008.
When discussing low mortgage rates, its hard to avoid a conversation about the United States government’s bond buying program, which has seen almost forty billion dollars worth of bonds being purchased each month. These bonds are specifically backed by mortgages and has helped to contribute to the low interest rates home buyers are taking advantage of.
With investors gaining an increasing amount of confidence with each month as the economy recovers, more and more are beginning to buy stocks and sell bonds in response. This factor, excusing any unforeseeable crises in the future, lends credence to the expectation of an increased mortgage rate over the course of the remaining 2013 year. As more money is poured into stocks, you can expect an increase in mortgage rates as well.
Given the data that is currently available, it is a conservative estimate that mortgage rates will remain at below four percent for the remainder of the year, with a possible slight bump of less than a quarter of a percent by the end of the year. This is, of course, going along with the belief that the economy will continue to slowly strengthen itself.
If the economy strengthens itself too much though, mortgage rates can be expected to increase at an alarming rate as the bond market faces increased rates of inflation. Then again, if the economy is hit by a sudden and unexpected event, it’s entirely possible it could find itself in record lows once again.
The ultimate question then is, should you buy property now or wait? Unfortunately, the answer isn’t entirely clear. Then again, speculative purchases like this can never be a sure thing. Based on the data available though, now seems to be as good a time as any to put money down on that dream home you’ve always wanted. With the economy slowly building itself up, now’s the time to lay money down before an unexpected event dramatically alters the mortgage rate and home buying landscape. With mortgage rates as low as they are, and interest rates equally low, it would seem that the wisest and most prudent move would be to act now and take advantage of these amazing opportunities. Even if the mortgage rates begin to experience an incline, you would do well to act before it’s too late.
This article is brought to you courtesy of Brent Wayne, a Business Specialist and senior writer from Mortgage Loan.