Are Mortgage Interest Rates on the Rise?

Many of you may have noticed that 30-year mortgage rates have fallen to very low levels, with 15-year mortgage rates coming in even lower. These rates are the result of several factors, and the housing market's overall slow march toward recovery has helped to suppress any major upward rate swing. Unfortunately, it appears that may be changing this year, for a number of reasons.

Federal housing aid is ending in 2010

To understand why this matters, let's go back a couple of years. In late 2008, when pains in the housing market threatened to turn the U.S. recession into a depression, the Federal Reserve stepped in. To ensure credit opportunities would continue for would-be buyers, the Fed bought up mortgage securities that were being shunned by private investors.

Well, a good thing—for homebuyers, at least—can't continue forever, and federal involvement in the mortgage securities market is poised to end in March 2010. The exact effect on mortgage rates once this happens is unknown, but many expect the withdrawal to push up rates.

The homebuyer tax credit also ends in 2010

We recently wrote about some often-overlooked benefits of the federal homebuyer tax credit, including its applicability to current homeowners and how one can claim the credit on a 2009 tax return. Predictably, it's been a popular program, and its extension was heralded by both buyers and sellers.

Like housing aid, however, this program will be phased out this year. There's no doubting the credit has driven short-term sales, but the overall effect—coupled with an expansion of the Federal Housing Administration mortgage insurance program—could be a distortion of the market. That leaves us all to wonder what will actually happen when the government steps back.

Now may be the best time to buy a new San Antonio home

2010 may be a year of uncertainties in the housing and mortgage markets, which makes today the best time to purchase. Rates are at historic lows, the homebuyer tax credit is still available, and McMillin Homes has several outstanding San Antonio communities with impressive features. Why wait for the unknown?

Tagged in : Mortgages