How Low Can Rates Go?

By VICKIE ELMER – New York Times

IF your New Year’s resolutions include buying a house or refinancing, the Federal Reserve has you covered. It has committed to keep long-term interest rates low through next year, so a 30-year mortgage will be pegged about where it is now — 4.32 percent in New York — at least through spring, said Frank E. Nothaft, the chief economist at Freddie Mac.

“Rates are very much at the bottom,” Mr. Nothaft said. But, he added, they may start inching up in the second half of the year. “If you’re planning to refinance, do it sooner rather than later.”

In order to cash in fully on some of the lowest interest rates ever recorded, buyers and owners need to start taking steps now, experts say. Rather than look for a house you really want, they suggest first finding out how much money you can afford to borrow, and what you can do in the next three to six months to improve your creditworthiness.

“Sometimes it takes a few extra months to get your ducks in a row,” particularly if there are mistakes or blemishes on your credit report, said Gene Tricozzi, the president of Northern Funding Corporation, a mortgage brokerage in Clifton Park, N.Y. If your score is below 700, your mortgage interest rate could be a quarter to a half percentage point higher than for those with stronger scores, experts say.

clear skies,

Doug Reynolds

 

www.BHGshortsales.com

Freddie: Low Mortgage Rates to Hang Around Next Year

By Drew FitzGerald

Mortgage rates are expected to remain very low at least through mid-2012, while housing activity improves slightly, according to Freddie Mac’s economic and housing outlook released Wednesday.

The outlook also projects fewer single-family home-loan originations but more multifamily lending in 2012. The rental market is likely to lead growth in the lending industry, though parts of the country will also benefit from increased activity in the single-family home market.

High unemployment and a glut of foreclosed properties have depressed the housing market in recent years, despite extremely low interest rates that have made borrowing more attractive.

“While the headwinds remain strong going into 2012, there are indications the economy and the housing market are gaining ground, albeit slowly,” said Frank Nothaft, Freddie Mac’s chief economist. “All told, next year will be another bumpy ride.”

Job growth must accelerate beyond the average monthly payroll gains of 130,000 seen this year through November for the unemployment to decrease significantly. Even then, the mortgage company predicted the unemployment rate will remain above 8% in 2012.

Freddie Mac predicts the U.S. economy will grow by about 2.5% next year.

clear skies,
Doug Reynolds
 
www.BHGshortsales.com