Will the Mortgage Rates for Houses Go Any Lower in 2013?

The year 2012 was a good year to buy homes on a mortgage. It did not surprise anyone that home loan rates dipped to record lows during the year. If you have missed many opportunities to buy your dream house at less interest cost, you might be wondering about the track mortgage interest rates are expected to take in 2013.

The Mortgage Bankers Association (MBA) has released its forecast for the coming year. This time, the group is more cautious and analytic in setting its estimates. The expected rates can serve as a guide if you plan to apply for and obtain a home loan in 2013.

Interest rates on 30-year fixed-rate mortgages are forecast to modestly rise to 3.9% in January to March of 2013. That compares to 3.8% interest rate in the fourth quarter of the preceding year.

The outlook for the rest of the year may serve as a warning. The same mortgage interest rates are expected to rise to 4.4% by the last quarter of the year. The annual mortgage interest rate is expected to average 4.1%.

Grain of salt
But analysts advise you to take the projection with a grain of salt. Forecasts on the track of mortgage interest rates can be inaccurate. In 2011, MBA expected 30-year fixed-rate mortgage rate to average 4.4% in 2012. But, as you see, the forecast missed. The rate actually averaged 3.8% that year.

This time, inflation is not the major factor that is expected to influence mortgage interest rates in the coming year. Economic uncertainty in Europe as well as the consequent actions taken by the US Federal Reserve can weigh heavier on the rates. It is possible that mortgage interest rates can fall lower this year.

It would help that Fed will buy mortgage-backed securities worth more than $40 billion every month until signs of improvement become evident in the market. The agency plans to buy up to 36% of home loans to be originated in 2013.
Other factors

On the other hand, mortgage refinancing activities are expected to rise in 2013. That is because many applications in the last few months of 2012 have not yet been processed and are expected to be completed in the first quarter.

Mortgages are set to rise by 16% this coming year. Factors that are cited for this increase are growth of the economy, higher home sales, and more cash purchases. Another factor is the decline in unemployment rate. There are about 1.5 million to 1.8 million new jobs that are set to be created by the private sector in 2013.

The coming year can be a promising one for homebuyers. With so many houses available in the market, you can possibly find your dream home this year. If mortgage interest rates will decline again in the coming year, will you let the opportunity pass?

No one knows if rates will decrease to such attractive rates again. If interest rates fall, will you finally get a mortgage?


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