3 Things you should look out for in 2014 are:
- Starting January 10th there will be no more interest only loans
- Interest rates are going to be lower in early 2014 (January, February) than they were in November, December 2013
- Interest rates will increase beginning in June and could reach 5% by this time next year
There are many changes going in affect in 2014 regarding home loans. One of them is that starting Friday January 10th there will be no more interest only loans. I am also hearing that credit will tighten slightly and standards for qualifying mortgage and ability to repay will take place. More about that at a later date.
As we all suspected, interest rates can not stay at 4% much longer. I was speaking with a trusted mortgage colleague of mine, Robert Withers who has advised me that mortgage rates will drop slightly in the beginning of 2014, but will be on the rise by summer. Robert had told me back in December that we were going to see a drop in rates in January due to poor retail performance during the holiday season. This has come to fruition. I am starting to see interest rates drop slightly already and we are only 9 days into 2014.
The drop in rates is only temporary. What does this mean for buyers? If possible you should lock in your rates now. By the height of the spring/summer market rates will start climbing. The reasoning for the higher rates is the FED will be pulling back on their mortgage buy back program, naturally allowing for interest rates to climb. For buyers, you will see higher rates and also stricter guidelines for qualifying for a mortgage. Stricter does not mean that it will be impossible to get a mortgage, in fact the opposite, most people with good credit will still qualify, however lenders will be less forgiving if you fall even slightly below their guidelines.
What should you take away from this? If you are on the fence about buying, jump off! Get out there and try to lock in the low interest rates. Same goes for people who are on the edge of being approved for a loan based on criteria like credit score or liquid assets.
2014 will be equal if not better than 2013 for the real estate industry. You just need to make sure you have all the facts so you can make a more educated decision.