Interest Rates--Up or Not? What's Really Happening
Well, as many of you have likely heard over and over for the past year and change, interest rates in general--and mortgage rates in particular--were going to be heading up. Some experts predicted that by the end of 2014 mortgage rates would be at 5%, quite a bit higher than where they were last year. As you know, every time these rates climb, the cost to you of buying a home rises with them. The house may cost a specific amount, but every penny you have to borrow to complete the purchase costs you more. It's kind of like going to the grocery store--given today's supermarkets, that's a quaint notion--and on day 1 finding steak costs $8/pound; then returning for more steak on day 10 and finding the price has now gone up to $10/pound. Kind of spoils your apatite. Well, as the following information indicates, rates haven't gone up that far--in some cases had begun to do so and then dropped back down.
Good news for homebuyers: Interest rates for home loans continue to linger at historically low levels, extending a rare opportunity to get a mortgage at rates that can shave hundreds of thousands of dollars off payments over the life of the loan.
Bankers and economists last year had forecast mortgage rates to climb higher in 2014 and top 5 percent by the end of the year. But the reverse happened, and rates today on a 30-year mortgage are nearly one-half of a percentage point lower than where they stood a year earlier.
Today’s low rates give another chance at home ownership to Bay Area residents who were outbid on properties during the frenzied real estate scene of 2013 and early 2014.
Since then, the number of all-cash investors has dropped significantly and the supply of homes on the market has gradually expanded — both signaling new opportunities, especially for first-time buyers.