16 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 7 Number 16 www . LynchburgRealEstateBrowser . com
Why Is Now Such A Good Time To Buy A Home ?
By Sherry Brady , NMLS 217258 , Branch Manager , Summit Mortgage Corporation
Have you been wondering whether now is a good time to buy a home ? For many people , this decision is largely driven by interest rates . Where are the rates now ? Could they go even lower , or are they headed up ? It ’ s impossible for anyone to know for sure where rates are going to go , but having some historical perspective may help you decide .
Freddie Mac has been tracking average mortgage interest rates for almost 45 years . In the 1970 ’ s , interest rates were around 9 %. In the 80 ’ s they peaked , and the highest recorded interest rates occurred in 1981 when the average person obtaining a 30-year fixed rate mortgage had to pay almost 2 ½ discount points just to get an 18.5 % interest rate for their mortgage loan ! That ’ s hard to fathom , and higher than most credit cards are charging today ; yet , even at nearly 20 % interest , people continued to buy homes .
In the ‘ 90 ’ s , things calmed down a bit and the average 30-year fixed rate mortgage fell back down to around eight percent and for the next 20 years , rates stayed roughly in the range of six to eight percent . Even rates of six or seven percent seem incomprehensible to many first time homebuyers today though . Why ? Because for the last few years , 30 year fixed mortgages rates have hovered around four percent . The reality though is that we only hit those historic lows as a result of a terrible housing and financial crisis , and the Federal Reserve was doing everything within its power to help the economy get back on its feet as we struggled to recover from the “ Great Recession ”.
In the winter of 2008 / 2009 , the Federal Reserve announced its “ Quantitative Easing ”, or QE , plan , which caused rates to drop a full percentage point in what seemed like overnight . Between then and December of 2015 we had been under some version of QE , holding rates at bay as the economy recovered .
So , where are we now ? For the last year , the Fed has been looking for evidence that the market and the economy are strong enough to endure a plan of gradual rate hikes . Since election night , the markets seem to have given the response the Fed has been waiting for . The stock market has soared and bond prices have plunged , which also lead directly to rising interest rates of all types , including mortgage rates . The Fed will meet again in mid-December and it is widely expected that they will raise rates another quarter point , and that they will follow with additional hikes in 2017 .
What ’ s the bottom line ? We ’ d like to think rates are going to stay this low forever , but history has shown us that they probably will not , and the future is pointing directly to rate increases . Don ’ t miss your chance to maximize your buying power ! Higher rates will mean you can buy less home for the same amount of money , so don ’ t wait too long . Rates are still very low and this is still a GREAT time to buy a home . Call us or your lender today to get pre-approved and start the journey to your new home ! http :// www . lynchburgrealestatebrowser . com / index . php ?/ properties / price _ reduced http :// www . lynchburgrealestatebrowser . com / index . php ?/ properties / price _ reduced for the latest REDUCED properties . for the NEWEST LISTINGS .
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