Freddie Mac recently released it’s PMMS, the Primary Mortgage Market Survey stating that the average fixed rates for mortgages remained fairly steady. The 30 year fixed rate mortgage was averaging 3.7% at a little more than ½ a point which was down from 4.41% this same time last year.
This is great news for buyers and sellers alike. Right now, we are in the “sweet-spot” where the market is looking good for both buyers and sellers. As rental costs climb and interest rates stay low, more and more buyers will be looking for a home in order to get in on the historically low costs of a mortgage. Why is this good news for sellers? The more buyers that are out looking, the more likeliness that home prices will continue to increase. Albeit slightly.
But there’s danger on the horizon. Since last year, the Fed has been hinting on raising interest rates, which is typically what happens as the economy gets stronger. Last Wednesday, the Federal Reserve released a statement saying it would consider raising rates as early as June, 2015. Rates have been artificially low for quite some time now in an attempt to stimulate and strengthen the economy. It seems the Fed is optimistic that the economy no longer needs as much help from the stimulus as in the recent past. Fed Chairwoman Janet Yellen said the Fed was not declaring an interest rate hike in June for sure, but went on to say, “we can’t rule that out”.
From all economic forecasts, it appears there is change coming soon, perhaps as early as this summer. This information may just be enough to spur those fence-sitting buyers to make the plunge into homeownership. And it just may be the push sellers need to place that For Sale sign in the front yard.
All before it’s too late and the current “sweet-spot” turns sour.