Just in time for buying and selling season to settle down slightly, we predict mortgage rates to be (drum roll, please)…about the same as they are now. Yes, mortgage rates in general will be on a steady pace for the next couple months and they will appear to be stuck in this range for some time, outside of the unexpected hike in late August. Why do we say this?
The economy, while showing signs of improvement in certain areas, is still sluggish. There is growth and real estate prices are on the rise but there’s no “gang buster” economy on the horizon. And regardless of what might happen with real estate along the Magnificent Mile, the economy nationwide is what affects mortgage rates, not necessarily in our own backyard. This can be a plus for us when buying a home in the Chicagoland area.
For example, the Unemployment Rate for September fell again, this time to 7.2 percent. While that’s way off of the high of 9.9 percent reached in 2010 it’s still way, way above where we need to be. And yes, the economy added significant jobs in this year, but again, that’s well short of what is needed to fuel an economy. Personal earnings are up, albeit slightly and consumer spending is rumbling but there’s no white-hot economy anywhere.
The Fed will sit on their hands for several months and even if they did try and lower interest rates there really isn’t much lowering they can still do. What they are prepared to do is halt what they call Quantitative Easing just as soon as the Unemployment Rate hits 6.50 percent. We’re getting closer to that rate but we’re still nowhere near it. All this economic data tells us that rates will be in their current range at least until this coming spring 2014.
So what can we expect in the mean time? We can expect a robust round of real estate buying and selling in and around our fair city with reduced inventory, price appreciation and low mortgage rates. Not a bad combination, wouldn’t you say?