Don’t Focus Too Much On Interest Rates
April 19th, 2010 categories: Mortgage Info, Real Estate News
Here’s why it doesn’t pay for homebuyers to obsess over mortgage interest rates: It’s impossible to predict whether they’re going to rise or fall. Interest rates that seem high one week might very well plunge to far lower levels the next.
And people who tell you that they know what interest rates are going to do next week, next month or next year? They’re either deluded or lying.
Here’s an example: Last week, mortgage interest rates fell again, falling, actually, to where they stood about two weeks ago. This followed two weeks of worrying from buyers, sellers and economists that interest rates were going to keep rising.
Turns out, everyone was wrong. This isn’t unusual. It’s simply impossible to predict with any degree of accuracy where interest rates are headed from week to week.
According to a story in the Wall Street Journal, the average interest rate on a 30-year fixed-rate mortgage fell to 5.07 percent for the week that ended April 15. That’s down from 5.21 percent one week earlier. A year ago, though, 30-year fixed-rate mortgages came with an average interest rate of 4.82 percent.
Interest rates near 5 percent are actually quite favorable ones. There were times, remember, when homebuyers considered interest rates in the 7-percent range to be terrific. That time? It was about four years ago.
When clients ask me when they should buy, I have a simple answer: Whenever they’re ready. I advise them to not worry over interest rates. The rates are out of buyers’ control. They’ll always rise and fall. Buyers who try to time their home-buying decisions to take advantage of the lowest interest rates are invariably disappointed: After all, there’s no guarantee that interest rates won’t fall again after these buyers close on a mortgage loan.
If you’re hoping to buy a condominium or single-family home in Chicago, this is a great time to buy, regardless of what the interest rates are doing. Home prices here are still low. You can find great buys in the city’s top neighborhoods, places like Lincoln Park, Lincoln Square, Roscoe Village, Ravenswood and Lakeview.
So stop obsessing over interest rates. Instead, study your local market. You might find that there are plenty of great buys out there. Their sellers are just waiting for offers.
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