2013 was an up and down year for mortgage interest rates, though they remained relatively low. What can we anticipate for 2014 and will it be a good time to think about buying a home?
The Web site loanlove.com which offers prospective buyers advice on the ever-fluctuating mortgage rate market in a down-to-earth style, says yes. They prognosticate that 2014 will offer plenty of good opportunities to purchase with highly palatable interest rates available and possibilities for low down payments for qualified purchasers. They do offer the caveat that interest rates are likely to spike up throughout the year.
A forecast report from the Mortgage Bankers Association predicts that rates for a 30-year fixed rate mortgage will rise above 5 percent in the fourth quarter of 2014 and continue up from there to a potential ceiling of 5.3 percent by the end of 2015.
What does that mean for you, Mr., Mrs. or Ms. Home Buyer? Clearly, if you are thinking about stepping into the market and will be shopping for a mortgage, the time to strike out is now. You’ve got a good six months to shop and a reasonable expectation that a mortgage under 5 percent will be available when you find that just-right home.
I took a look at current rates in San Diego posted Dec.20, 2013. Thirty year fixed rate loans with no points ranged from rates of 4.286 percent with Sebonic Financial, offering the lowest rates, to 5.126 percent with Quicken, coming in at the other end of the spectrum. The lowest payment on a $100,000 loan was $812, with the highest coming in at $885, a difference of $73 per month. On 15-year fixed loans, no points, Sebonic was offering 3.31 percent ($1,159/month) and Quicken 4.39 percent ($1,587).
5/1 Arms were at a low of 2.85 percent and ranged up to 3.428 percent on $100,000 with payments ranging from $685 to $800.
It is reported that the November 2013 inventory of San Diego County homes is equivalent to a 4.1 month absorption rate. Though this is up from 2012, an inventory of 6-7 months is considered normal. What this means is that there are houses available to buy, and choices for home seekers. In 2012 it took a median of 30 days to sell a San Diego house; in 2013, it took 32. Not a huge difference and this tells us the market is fairly stable.
Home prices are related to a number of factors: available supply, of course, and cost to purchase or interest rates. With supply satisfactory but not tremendous, and interest rates only slightly higher, it is anticipated that we will not see huge increases in home values. All in all, there’s neither a need to rush out and buy today, or hesitate too long. It’s decidedly time for leisurely shopping to find a good property at a fair price.
Del Phillips is a California Licensed Real Estate agent. He is a member of the National, California and San Diego Association of Realtors. You can reach Del at Ascent Real Estate at 619-298-6666 or at Del@DelPhillips.com DRE LIC #01267333.
