How Low Will Mortgage Rates Go in 2009?

Reader Question: “We are in a position to buy our first home, but we’re not sure whether to buy now or wait until the interest rates go lower. Is there any way to know how low mortgage rates will go in 2009?”

If you ask twenty different mortgage or real estate people this question, you’ll probably get twenty different answers. The reason, of course, is that nobody can truly predict how low the rates will go — at least not with any accuracy.

Here’s my best advice. If this is the only thing holding you back, I would seriously consider moving forward with your home purchase. Personally, I think mortgage rates are about as low as they’re going to be for the rest of the year. Sure, they will fluctuate up and down by tenths of a point. But they’ve basically held steady in the upper 4% and lower 5% range for several months now.

Everything I have read suggests this trend will continue for the coming months. That’s a pretty low rate — lower than we’ve had for decades. So, like I said, you should consider taking advantage of them now.

How Low Will They Go?

But don’t take my word for it. Here’s what some of the big news outlets are saying about this subject. Take together, this will give you a pretty good idea how low mortgage rates will go in 2009:

• This U.S. News article suggests that rates might slowly climb toward the 6% range by the end of 2009. Actually, it cites a report by HSH, a mortgage information service.
• The predictions made in this New York Times article are more in line with my own views. It suggests that mortgage rates will hover in the low 5% range for the rest of the year.
• This Business Week article echoes the predictions in the New York Times piece above, putting rates between 5% and 5.25% for the remainder of 2009.

Also, keep in mind that mortgage rates are not the only motivator right now. Home prices are also at record lows in many cities across the U.S. On top of that, first-time buyers can qualify for an $8,000 tax credit if they purchase by the end of the year. So while I can’t say with certainty how low mortgage rates will go in 2009, and I can tell you that now is a good time to buy for well-qualified buyers.

In closing, I want to give you one last piece of advice about buying a home. Before you start talking to mortgage lenders and shopping for interest rates, you should determine your budget. Here’s an article that will help you determine how much you can afford to spend on a house.

Disclaimer: This blog posts provides general advice on how low mortgage rates may go in 2009. This blog provides general information only. We are not acting as financial advisors. Please do not make any financial situations based solely on our advice. Always seek financial help from a professional.