As reported by Kimberly Palmer in the Washingtonian magazine (January 2016, Home Economics), interest rates have been historically low since the “great recession", allowing homebuyers to lock in 30-year mortgages at rates of less than 4 percent. But those days may be coming to an end, as many experts expect rates to rise slowly over the next few years. The Mortgage Bankers Association forecast that rates will hit 4.8 percent by the end of 2016, and as high as 5.4 percent by the end of 2017.
If you’re thinking about purchasing a home over the next year or two, you may want to consider accelerating the process because a home will cost you more as rates go up. If your major hurdle is saving for a down payment, there are several down payment assistance programs in DC, MD and VA, including DC’s zero down payment assistance program (DC Open Doors). Banks have also loosened their lending restrictions, as most are offering conventional loans with just a 3% down payment.
If you have been thinking about selling your home, now may be a good time to contact a Realtor to discuss your options. Rising interest rates can push down housing prices because Buyers can afford less. However, many experts believe there are a lot of positives in today’s economy to counteract the fears that home sales will fall, including low inflation rates and low unemployment. So long as folks have jobs, folks will be buying homes.