Source: Market Watch (Holden Lewis)
The housing picture is likely to improve in 2018:
- Home prices are expected to climb, but not as fast
- More houses could be for sale toward the end of the year, giving home buyers a greater selection to choose from
- Homeowners will have more equity to borrow from
Source: www.investopedia.com (Melissa Parietti)
As interest rates rise, the affordability of a new home purchase decreases while currently held adjustable rate mortgage (ARM) payments increase. Mortgage rates are based on national interest rates, and current rates are very low relative to where they were during prior to 2013. The low rates are due to a federal interest rate of 0.25% that has held in place since 2008. In September 2015, the ARM Index released by the Federal Housing Finance Agency (FHFA) showed an index rate of 3.93%.
Recent increases in home prices signal that there may be a higher demand for homes that wasn’t present before. If mortgage rates increase after all-time lows, indecisive home buyers may be persuaded to sign for mortgages to take advantage of current low rates in light of future higher rates.