Thursday, April 8, 2010

Mercer County NJ Buyers - Mortgage Rates are Starting Up

It appears the window for buyers to find loans with low mortgage rates is closing.  The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in just the past week.  Many analysts forecast rates will rise as high as 6 percent by early next year.

If you were hoping to obtain financing, but were relying on a certain low rate, you may soon be priced out of the market to buy a New Jersey home.   For every 1 percentage point rise in rates, 300,000 to 400,000 would-be buyers are priced out of the market in a given year, according to the National Association of Realtors.

Rates are going up because of the improving economy and the end of a government push to make mortgages cheaper.  U.S. government debt, a safe haven during the recession, is losing its appeal as investors turn to stocks and riskier corporate bonds.  Also, Last week, the Fed ended its program to push mortgage rates down by buying up mortgage-backed securities.

The rule of thumb is that every 1 percentage point increase in mortgage rates reduces a buyer's purchasing power by about 10 percent.  This may be good news for sellers, as buyers race to complete their purchases and lock in rates before they rise farther. 
 
For example, taking out a 30-year mortgage for $300,000 at a rate of 5 percent will cost you about $1,600 a month, not including taxes and insurance. But the same monthly payment at a rate of 6 percent will only get you a loan of $270,000.

So, start looking now.  Think of a new home in Hamilton NJ which is more affordable now than in many years, or a resale in Ewing or Lawrence or West Windsor.  Foreclosures are plentiful too.  Think about your buying power and plan ahead to purchase that Mercer County home this Spring or Summer.

Joe Giancarli, Sales Associate
609-658-2612
jgiancarli@remax.net
http://www.joegiancarli.com/
http://www.njhomesource.com/
http://www.newjerseynewhomes.blogspot.com/












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