Rates are definitely rising. While there is absolutely no way of knowing exactly what is going to happen, we would not be surprised to see rates go from 3.75% (where they were 1-2 months ago) and rise to as high as 4.75% in 2017. Many experts agree that they will not go that high, but a lot depends on the economy under President Trump. The stronger the economy, the higher the rates will rise.
According to Kiplinger “By the end of 2017, expect the average 30-year fixed rate mortgage to rise to 4.6%, with 15-year fixed rates at 3.8%.” http://www.kiplinger.com/article/business/T019-C000-S010-interest-rate-forecast.html
Michael Winks, Executive Vice President/chief lending officer for Grand Rapids, Mich.-headquartered Northpointe Bank, anticipates rates remaining in their current range through 2017 – around 3.75% to 4.25% for the 30-year fixed mortgage and 2.75% to 3.25% for the 15-year fixed mortgage. http://themortgagereports.com/22364/mortgage-rates-predictions-for-2017
And here is some more information: http://www.bankrate.com/news/rate-trends/mortgage.aspx
All in all, Colorado Springs is an amazingly stable market. Historically we simply have not seen the wild swings and bubbles seen in California, Florida and other markets (even Denver). With five military bases and a relatively large but diversified group of primary employers, you can look at just about any ten year period of real estate values over the last 100 years and see – on average across the time period – 1.5 to 3 percent annual growth year over year.
- Now is a fine time to buy because property values continue to rise and it’s better to pay today’s prices versus tomorrow. On the other hand, given the strength of the market right now, it won’t necessarily be poor timing to wait until later in 2017: you have flexibility.
- It continues to be a very hot market for Sellers. Under around $500,000, it’s a seller’s market and homes are selling quickly and for good prices compared to the similar properties 2-3 years ago. Next year is expected to remain good. Like Buyers, we’re in a market that offers flexibility for Sellers.
- CAUTION: For every percent rise in the interest rate (e.g. 3.75% to 4.75%) a Buyer’s purchasing power is reduced by 11%. Instead of qualifying for a $350,000 home, the buyer only qualifies for $311,500. And conversely for Sellers, a rising interest rate shrinks the pool of qualified buyers for their home. So while there is flexibility, there should also be a sense of urgency before interest rates jump too high.
Lisa Fisk is a licensed Managing Broker with The Fisk Team at RE/MAX Properties, Inc. serving home Buyers and Sellers in the greater Colorado Springs area. Reach the author at Lisa@FiskTeam.com or 719-439-7130.