According to Bankrate, the national average for a fixed-rate, 30-year mortgage has fallen to 4.23% presently; while no longer at historical lows, a rate like this means that the cost to borrow is still very modest. I can tell you that home buying activity in my immediate area has been rather active, and there appears to be little sign of that abating anytime soon. However, as far as interest rates are concerned, there need not be any urgency on the part of prospective home buyers. Based on the positively anemic (at best) growth of the economy, those in the market should see significantly low rates for the foreseeable future…perhaps even for years to come. There are several “drags” on the economy presently, none of which is expected to lighten anytime soon: Unemployment, including underemployment, remains substantial; also, the ability to obtain competitive financing for anyone but the most creditworthy people remains a distinct challenge; additionally, home inventory is expected to remain low for a long while, yet.

There is a host of other problems, too, but the bottom line is that mortgage financing should remain cheap for the next few years, at least. The reality is that until the economy finally evidences a true, organic, turnaround…rather than a few minor blips of hopeful news and data…those interested in buying a home will have ample time to shop.

One small caveat: While rates are expected to remain at the general level of historical lows for a while, it is not likely that they will return to the near-obscene levels of late 2012/early 2013, when they were just a bit above 3%. In other words, if you do find a house you like, and have the ability to obtain financing, there’s no reason to otherwise remain on the sidelines.  

Robert G. Yetman, Jr.
Managing Editor, The James L. Paris Report