What is the outlook on mortgage interest rates for 2018?
If you are a buyer in today’s market, interest rates really matter. Any rise in rates will affect affordability.
In 2017, the interest rates started around 3.5%. By December of that year, rates were between 4% and 4.1%.
Now as we enter the first quarter of 2018, rates are still hovering around 4.1%. It’s likely that rates will stay static for another month or so, after which they may rise to 4.4% or 4.5%. Then, rates are expected to continue rising throughout the year. We won’t see a huge jump, but they will certainly rise.
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In fact, rates may be at 4.9% by the end of this year. That would mean a significant change in affordability. According to CoreLogic, the value of our Central Florida homes has already increased by 10% recently. In the US as a whole, market values have increased by approximately 7%.
Due to the speed at which homes are appreciating, homes will become more and more expensive as the year progresses. If you want to buy a house in 2018, I recommend doing so sooner rather than later. For the remainder of the year, we’re expecting a healthy 3.5% increase in home value.
When you buy right now, you can take advantage of more affordable prices while also locking in a lower interest rate. If you are ready, willing, and able, now is the time for you to buy.
One more thing I’d like to point out is that the Freddie Mac guidelines have now changed. The rates for a conforming loan have increased from $400,000 to $453,100.
VA loan financing has also changed its limit to $453,100. If you plan to buy a home for more than this amount, you can still get a VA loan. However, you must be able to pay at least 25% of the difference. Also, the FHA limit is up to $294,015.
Due to these changes to Freddie Mac guidelines, a lot of lenders are coming up with their own conforming and non-conforming loan limits. Many are even allowing for 3% down on conventional loans with a PMI that is either reduced or is included in the loan itself.
If you’re looking to take advantage of our market right now, I suggest you call on my team and I. We are among the top 1% of Central Florida when it comes to buying or selling a home.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.