Interest rates have been at historic lows for the past few years. What everyone wants to know now is how much longer will interest rates be this low? The market won’t be this good for buyers forever. Anyone who is interested in purchasing a home in the near future shouldn’t be too worried about rates increasing too much anytime soon.
Don’t Feel Too Much Pressure to Buy Just Yet
It is certainly a good idea to buy a house while interest rates are still low. However, don’t feel pressured to buy a home just because rates and prices are low if you’re not ready. Figure out your situation and what you want in a home, only when you know you’re ready should go out and buy a home. If you’re a homeowner and can stand to benefit from a lower rate should refinance now. The rates cannot possibly get significantly lower than they are now.
Unemployment and Challenged Credit
The national unemployment rate is hovering at around 8 percent. People who don’t have jobs are not going to be applying for mortgages. Home values have also plummeted in recent years. People who still have their home aren’t looking to sell when the price is so low.
These two factors make it hard to see any real enthusiasm in the housing sector for at least the next 6-12 months. Banks are also making it harder for borrowers with less than perfect credit scores to qualify for these low interest rates. Limited access to loans is another barrier for buyers who want to purchase a home.
Another Wave of Foreclosures?
Foreclosure rates had been fairly steady over the past year or so. However, there is another spike that is expected in the near future. This is because many homeowners were able to continue making payments with credit cards, raiding personal savings accounts or through loan modification.
The long-term unemployed will eventually have to admit defeat to their lenders. Another wave of foreclosures is going to be inevitable. Don’t forget that many homeowners are also in the process of strategic default. This means that the owner of the home is intentionally missing payments in hopes of convincing the bank to allow for a short sale.
Interest rates are going to stay low for the foreseeable future. A weak job market combined with limited access to the best loans makes it hard for people to purchase homes. Those who can qualify for the lowest rates shouldn’t worry about that changing anytime soon.