Low Mortgage Rates and Other Factors Will Help Housing in 2015
Mortgage rates hit a new low in 2015, defying experts' forecast of higher rates. Average 30 year mortgage rates today are at 3.84 percent, down from the prior week's average 30 year rate of 3.89 percent. We were supposed to see 30 year rates above 5.00 percent in the first quarter of 2015, but just the opposite has occurred.
Mortgage rates headed lower instead of higher in 2014 and thusfar in 2015 as a result of bond rates moving lower. 10 year bond rates were forecast to be about 3.00 percent in the first quarter of 2015. Instead, 10 year bond yields are down 7 basis points to 1.75 percent this morning.
In fact, 10 year bond yields are only 8 basis points above the all-time record low set in early 2013. This second round of low rates is starting to set off another refinance boom. Homeowners are taking advantage of record low rates and refinancing their home loans to lower their monthly mortgage payments.
Low mortgage rates combined with a strengthening economy are expected to help the housing market. Home sales and home prices are expected to increase in 2015. Fannie Mae released a report entitled "2015 Economic Outlook: Economy Drags Housing Upward," which supports this view.
Purchases of new homes in the United States has increased to the highest point in over 6 years. The Commerce Department said that new home sales increased 11.6 percent in December to 481,000, the most since June 2008. This is yet another positive sign for the housing market in 2015.
It will also be easier to get a mortgage in 2015 because the Federal Housing Finance Agency, the overseer to Freddie Mac and Fannie Mae, loosened mortgage restrictions. Lower down payments and lower mortgage insurance requirements are all designed to help make homes more affordable for first-time homebuyers.
All of this is positive news for the housing market. The National Association of Home Builders released an interesting report on housing trends and Millennals. As first-time buyers, they will demand smaller, more affordable homes. You can read the entire report: Millennials Seek Smaller Houses, But Won’t Sacrifice Details, Panelists Say.
First time homebuyers, Millennials in particular, were absent from the housing recovery. Millennials are expected to enter the housing market in larger numbers in 2015 and are expected to drive the building trend towards smaller housing.
If you have been thinking about buying a home but have been waiting on the sidelines, you should purchase in 2015. Mortgage rates and home prices will be moving higher in 2015 and in the coming years. The same size home purchased later will cost you more as home prices and mortgage rates move higher.
RatesORama.com Average Mortgage Rates