Monday, March 28, 2005

Should You Wait Out Mortgage Rates?

Click On Detroit
Mortgage rates have been rising steadily, and rates on 30-year home loans are back above 6 percent, on average, for the first time in eight months.

Is it a good idea to wait in hopes that rates go back down? Maybe not. Senior vice president Jack Radin with online lender Mortgage-IT said it can be a mistake to buy when rates are low, because low rates can draw more people into the market and result in higher prices. He said you might, in fact, do better buying when rates are up. That tends to depress home values, so you can get a home at a more affordable price and plan to refinance later, if rates do eventually retreat. Home prices have continued to escalate, but economists predict we'll see some cooling off if mortgage rates keep going higher this year. And they said rates are unlikely to fall anytime soon, with the Fed pushing up interest rates and mentioning the "I" word -- inflation.