Projections are out for interest rates for 2014 – interest rates will be going up. If they go up significantly, the real estate market will be affected. The chief economist of the National Association of Realtors, Lawrence Yun outlined his housing-market forecast for 2014 at NAR’s annual conference, predicted existing home sales will remain flat at roughly 5.1 million units, prices will rise by 6% and interest rates, currently at 4.16%, will jump to 5.4% by the end of next year.
Yun also said with higher mortgage interest rates, he expects refinancings to collapse in 2014 to the lowest level in at least 15 years, and hopes purchase applications will begin to rise. “This is an incentive for banks to increase mortgage origination, especially considering the low default rates in recent years. But even with cheap mortgages for the past four years, all-cash buyers stayed high, accounting for over 30 percent of sales.”
However, with the new lending rules for Qualified Mortgages to go into effect this month, it may hinder lending even further. This may prohibit even more loan features, enforce even tighter loan limits and may require lenders to show borrower’s ability to repay – in other words, it may tighten the ability to secure a mortgage.
As we saw in 2013, the higher the mortgage rate, the fewer homes purchased. Unfortunately, the forecast is for this trend to continue, slowing the recovery. The rate on the U.S. Treasury note is also trending up for money borrowed by consumers and businesses, which may also hinder the recovery.
However, as gloomy as this sounds, NOW is a better time to purchase your home in the Desert than later. Call me at 760-567-728 today and let’s go over your buying options in the Desert – Historically, the Desert’s “Season” is one of the best times to buy & enjoy a home in La Quinta.