If You Don’t Buy a House Now…

21 Dec
2009

Filed Under Buying · Tagged: interest rates · Print This Article

“…You’re stupid or broke.”

That is according to Marc Roth of Buisness Week. A blunt message, but a powerful one. He points out that if you want to buy a house you should act SOON or regret it.

The reason? The interest rates are historically low — around 5%. Roth has studied the history of the rates and points this out: “First, rates have far further to move upward than downward; for more than 30 years, 7% was the low and 18% the high. The norm was 9% in the 1970s, 10% in the mid-1980s through the early 1990s, 7% to 8% for much of the 1990s, and 6% only over the last handful of years. Second, the last time the long-term trends reversed from low to high, it took more than 20 years (1970 to 1992) for the rate to get back to where it was, and 30 years to actually start trending below the 1970 low.”

Every quarter point rise in interest rates is equivalent, according to Roth’s calculations, to approximately $6,000 for every $100,000 borrowed for a 30-year fixed mortgage.

We’ve said on the blog before that this is not a time for fence sitting, and this is another example of why. If you want to buy or sell, waiting for the economy to “stabilize” could see you losing out. Sellers, remember — yes, it’s a buyers market and you may have to make compromises. But you have to focus on your buying benefits, such as these interest rates. Plus don’t forget the government incentives for buyers that are currently available.

Roth says, “if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime.”

Read the full story.