Predicting 2010 Interest Rates and Housing Prices
Last week Bob Tedeschi looked into the Manhattan real estate crystal ball for the New York Times and saw two big things: Mortgage rate on 30 year fixed rate loans rising from the current 5% to maybe 6% by late March and foreclosure homes saturating the market come this summer, keeping prices low.
So should you buy? According to Mark Zandi, chief economist at Moody’s Economy.com, yes if you’re in love.
“I wouldn’t rush, but if I found a house I was excited about, I wouldn’t wait. You might not be buying at the very bottom, but you’ll still get a great rate, and if you stay for more than a few years, you’ll be rewarded.”
HIGHER RATES:
The two pieces of the puzzle that will push rates up are that the Federal Reserve plans to stop subsidizing the mortgage market in march and the economy. He says mortgage rates tend to move along with the long-term economic outlook, and as we seem to be in the beginning of a recovery, rates will go up as the economy improves.
Zandi and Jay Brinkmann, chief economist for the Mortgage Bankers Association in Washington, are cited as predicting that rates will stay at 5.5% or under this year, and that if they do go above that rate the government will resume subsidizing. In addition Zandi predicts that the national housing market will drop another 8% in 2010. Unfortunately for my New York buyers the NYC market has continually bucked the national trends. We will see.
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