Really great article in the New York Times last Friday about what Americans can expect in the upcoming year. Well, what they can expect when it comes to mortgages and home buying to be precise. Overall, the news is pretty good for home buyers, who can expect to get more home for their buck and lenders making getting a mortgage just a little easier as restrictions loosen.
However, the news isn’t all good. Mortgage rates are expected to continue their slow rise over the next year as the Fed slows down it’s economic stimulus programs. The article predicts 30-year rates will rise above 5% for the first time since 2010. Although that is still near the lower end of historic lows, it’s not exactly something we all welcome with open arms. But it’s probably coming, so anyone who wants to refinance or buy a home isn’t doing themselves any favors by waiting.
I’ll summarize the four main points of the article:
Mortgage Rates Continue to Climb
A strengthening economy and the slowdown of the gov’s economic stimulus mean one thing – mortgage rates on the rise. While the lowest rates may be gone forever, rates are still pretty darn low and offer great value to any who hasn’t refinanced yet or wants to buy a home in 2014.
Lenders Loosen Up, a Little
Competition will be fierce for business in a market with rising rates and that means lenders will fight to get their piece of the pie. It will be interesting to see how this plays out, but there could be a slight change in minimum credit scores, minimum loan-to-value and minimum debt-to-income.
Homeownership Rates Flatten or Fall
Despite an improving economy, homeownership rates will level off as renting becomes more attractive, especially to younger Americans entering the home market.
ARMS and Cash-Out Refinancing Make a Comeback
Say it ain’t so. The often-maligned adjustable rate mortgage will become a more popular choice in this next year. And cash-out refinancing will also renter our vocabulary in 2014, after nearly disappearing for the past five years. Why? Because mortgage rates and home values are on the rise. Both make ARMs and cash-out refis are a great choice for homeowners. You’ll be hearing a lot about both in the upcoming year. You can bet on that.
That’s the list. Read the full article here (as a bonus, you’ll get to read some quotes and commentary from Quicken Loans Chief Economist Bob Walters). Do you agree with these predictions? What do you think?