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Determining when to buy a home is a personal decision with many variables. Some may try to pinpoint the "perfect time" and end up waiting themselves out of the market, while prices and interest rates rise. Interest rates have been at historic lows for the past several years and are still historically low, despite some recent upticks.

If you're planning to buy soon, consider these factors that may motivate you to jump in now.

  1. Interest rates are still at historic lows. The 30-year fixed has been hovering around 4.5% for the past year; it did near the 5% mark briefly before dipping back down. (As of this writing, the interest rate for a 30-year fixed is 4.5%). Most experts expect them to go into the mid- to high-5% range by the year's end. So, don't delay.
  2. Prices are still rising but not soaring. If you're waiting for home prices to start coming down before you buy, it might be a long wait. Though they're not rocketing up as they have been for the past several years (in many markets), they are still rising steadily. To avoid being left behind, consider buying sooner rather than later.

3.2% – the home-price increase year over year, according to the Vivas forecast

5.3% – What Realtor.com anticipates the 30-year fixed mortgage interest rate to be by 2019's end

  1. Increases in entry-level inventory. There has been a shortage of homes in the U.S. since 2015, forcing some buyers to settle and others to be prohibited from buying at all. This will begin to turn around with the middle and upper-tier price points recovering first.

30% – The percentage of new-home construction dedicated to first-time homebuyers, up from 20%, where it has been hovering the past few years

628,000 – The number of new-home sales predicted by the National Association of Home Builders for 2019, about even with 2018

  1. Hot markets are expected to stabilize. According to the California Association of Realtors forecast, San Francisco and the surrounding area have been at peak levels for a long time. Those prices can't be sustained indefinitely, so they'll have to level off. Southern states such as Florida and Texas are expected to see improvement, especially with affordable, new construction.
  2. Begin building equity now. Since prices are still on the rise, it's advantageous to get in now. Then, as the value of your home increases, you have the opportunity to build equity.



MBS RECAP: Markets Finally Doing Interesting Things, But...

Posted To: MBS Commentary

We had to wait all the way until January 24th of 2020, but bonds finally offered their first real shred of willingness to challenge the established range of late 2019. When we talk about ranges, we use 10yr Treasuries for these reasons . In 10yr terms, the range has been 1.71 to 1.95%, which is reasonably narrow for a 3 month+ time frame. It looked like the range would be quickly crushed as war with Iran quickly entered the realm of possibility on the night of the missile attacks against Iraqi air bases. But with the de-escalation the following day, the range was actually strongly reinforced. Rates have been trickling since then without more than a 5bp move in 10yr yields until today. That same move also breaks us well below the 1.71% boundary to close at 1.686%. As we often discuss, the first...(read more)

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Mortgage Rates Drop to 4.5-Month Lows on Virus Fears

Posted To: Mortgage Rate Watch

Mortgage rates moved meaningfully lower over the past 2 days as panic over the coronavirus outbreak continues affecting financial markets. If this epidemic ends up being similar to SARS in 2003, it ultimately won't be worth as much of a drop in interest rates as we've seen so far. But the thing about brand new strains of deadly viruses is that neither the market nor the medical community knows exactly how this will unfold. Until that picture becomes clearer, the market is preparing for more dire outcomes. For whatever it's worth, the timeline of the SARS outbreak spanned 2 calendar years (2002 - 2004) but the most notable market impact was confined to the space of a single month (March 2003). We'll be a week into February before the current epidemic reaches a similar milestone. I'm basing that...(read more)

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