Tehachapi home buyers may be in a quandary as to whether mortgage rates will rise or remain stable. The second question is whether or not it should make any difference in the timing of your home purchase. Let’s look at these issues one at a time.
Will mortgage rates rise for Tehachapi area home buyers? I wouldn’t be surprised if mortgage rates don’t rise at some point in the future. The problem is predicting when. That’s where the experts seem to disagree. One group is espousing the belief that since the Federal Reserve has stopped buying mortgage backed securities (MBS), mortgage rates must go up in response. Early last year, the Federal Reserve started buying mortgage backed securities. This helped to keep interest rates low. However, the Fed stopped purchasing MBS in March. So far, rates are holding stable. The California Association of Realtors expects rates to average 5.6% on 30 year fixed mortgages this year.
On the other side of the rising mortgage rate fence, we have Bloomberg’s position that “cheap mortgages may last as investors replace Fed.” Bloomberg’s article says that “The Federal Reserve’s completion this week of its program probably won’t mean significantly higher U.S. home loan rates as investors return to the market, replacing the Fed.” The article predicts that rates will likely rise less than a quarter of a percent in the next three months. That is the smallest increase in the second quarter since a drop in 2005.
So, who do you believe? Are rates going to rise dramatically, remain the same, or fall? Pretty hard to predict with any accuracy. One thing remains true though, this is still a good time to buy a house in Tehachapi or elsewhere in Kern County. Let’s look at the second issue — should mortgage rates define your home buying timing?
What effect should mortgage rates have on your decision to purchase a Tehachapi home now or later? The truth, in my opinion, is pretty much none at this time. Timing your purchase to what mortgage rates may or may not do won’t have a huge effect on the primary decision which is whether or not to purchase a home at all. If your budget is so tight that a quarter of a percentage point will seriously affect your ability to pay your mortgage, you should probably be looking at slightly less expensive houses. To put this in perspective, a quarter percent on a $250,000 loan will amount to about $30 per month. That’s pretty much equivalent to a pizza dinner.
This is still a great time to buy a home. Prices are still low, but the indications are that they are more stable than they have been for the past year. In some areas, prices are even rising! Most of the best “deals” are in the mid to low range of the market. That is likely to remain true for some time. However, there are also some higher-end homes priced quite reasonably. Regardless of what kind of home you are looking for in greater Tehachapi area or elsewhere in Kern County, this is great time to buy.
Please feel free to contact me personally at 661.375.REAL or send me an email if I may help you in any way with your purchase decision.