Mortgage rates have dropped but this low rate will not be here to stay. The prediction is that if the Fed pulls back on the stimulus next year, the 30-year fixed mortage can go up between 5 and 6 percent. If you were thinking of refinancing or purchasing a home you could be shocked from the interest rate that may go up significantly in January 2014. If the rate goes up, the amount you qualify for can change as well as the inventory. People refinancing and homebuyers should take advantage of the low rate lock and feel comfortable with the rate and the deal they are getting.
Several factors will put upward pressure on rates early next year, including the new deadline to raise the debt ceiling, the possibility that the Fed will trim the bond-purchasing program then and new mortgage rules that go into effect January. The Reserve Bank has been cutting the official interest rate for nearly two years in the hope of increasing activity in the housing construction sector. Housing inventories are down and housing prices are up. Lower rates means more potential buyers in the market.
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