Mortgage Rates Are Killing Home AffordabilityThis week's article is titled "Mortgage rates matter more than home prices". It talks about how, despite stagnant and/or falling home prices, home affordability is getting worse. The reason is mortgage rates.
With home values still fading throughout most markets, November's ultra-low rates made U.S. housing more affordable than during any time in the last 20 years. Cheap homes, cheap mortgage rates--what more could you want? It was no wonder sales activity spiked into the fourth quarter of 2010. Like everything else on Wall Street, though, mortgage rates are unpredictable. By mid-November, the momentum that had driven rates to a 50-year low had reversed. Mortgage rates were quickly rising. Home affordability has since suffered.The piece's message is that mortgage rates matter more to home buyers than home prices. Just a teensy rise in rates can wipe out whatever few thousand dollars you might win via negotiation. With mortgage rates rising (with little reason to fall), it's as good a time as any to buy that home you've been eying.
Lock Your Rate While Mortgage Rates Are Good
Mortgage rates are poised to rise. The economy is expanding, inflation is building, and bonds are losing. These are bad signs for the future of mortgage rates.
So, if you're in the process of buying a home, or wondering about a refinance, be aware time is not your friend. It's time to do something about it before your home affordability really craps out.
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