Mortgage Rates are Low! But How Long Will It Last?

In August 2011, the Federal Reserve pledged to keep rates at historic lows through the first half of 2013. While this move signals that the Fed is focused on sparking economic growth, there’s no guarantee that mortgage rates won’t creep up on their own. In fact, the Mortgage Bankers Association says rates on 30-year fixed mortgages could actually increase from current historic lows of 4% to around 4.9% by 2013.

This means in a few short months today’s low mortgage rates could very well be fond memories. As you well know, an interest rate increase of just 1% can mean hundreds of dollars more in monthly mortgage payments. For example, an increase from 4 percent to 5 percent on a $400,000 loan would increase your payment by $237 a month.

See for yourself: play with our mortgage calculator  to see how higher rates can affect your payment.

So if you’re not sure about buying a home now, keep in mind that you could buy significantly more house today than you may be able to in a year or two.

But don’t just take my word for it; consider what the Wall Street Journal has to say in Why It’s Time to Buy. Don’t have time to read the whole article? Here are some key takeaways:

  • For now, you can deduct mortgage interest from your income tax — a big perk if you’re in a higher tax bracket.
  • According to Freddie Mac, mortgage rates are near 50-year lows, making homes more affordable than ever.
  • According to Moody’s Analytics, the ratio of home prices-to-income is 20.9 percent lower than the 15-year average through 2010 and 12.5 percent lower than the 1989–2004 average.
  • The number of new households per year is going to make the market rebound in the coming years. “Whatever the excess housing supply is, it is shrinking pretty fast,” says Thomas Lawler, an independent housing economist.
  • Mortgage financing is plentiful for borrowers with good credit scores and solid employment histories.

Doug C. Yearley, Toll Brothers Chief Executive Officer, summed it up when he said “…some of our customers, after waiting so long, are starting to move off the fence and into the market, motivated by attractive pricing, low interest rates, and most important, the desire to take the next step in their lives. The family with the elementary-school kids and a puppy when the housing debacle began five years ago now has middle-school kids and the dog that weighs 80 pounds.

If you’re ready to start discussing your home buying options, feel free to contact a Toll Brothers Sales Representative by visiting TollBrothers.com.

 

This Post Has 7 Comments

    1. Toll Brothers

      Yes, we are building homes in 20 states. You can find out where by visiting TollBrothers.com. There is a map that you can use to see our locations across the US.

  1. M

    Hi there,

    I live in Northern VA and I am in the home buying process. I have checked out some homes built by Toll Brothers, they are really awesome looking and also priced very high. The homes I checked out are in the Ashburn area. I hope Toll Brothers build some Single Family homes that’s final price is around 400K – 450K if not less. For families with that budget have not other choice but to go for Townhomes or old Single Family homes. My observation is that, that’t the budget for a lot of them and that’s the comfortable zone for a lot..

  2. Tin

    i have a great credit score and employment history but i dont have a down payment saving to buy a house. According to your article its a good time to buy a house. Can i buy a house with 0 down payment ?

    1. Toll Brothers

      It could be difficult to buy a home with no money down to the recent changes in the mortgage industry over the past few years. Currently, the only way to finance 100% of the purchase price may be with a loan guaranteed by the Veteran’s Administration; however, these loans are only available to eligible service members and reservists.

      With that said, there are still programs in the marketplace that allow prospective buyers to put down as little as 3% to 3.5% of the purchase price.

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