'Mortgage rates fell further this week following the release of weaker housing data,' says Frank Nothaft, vice president and chief economist, at Freddie Mac.
He notes the U.S. pending home sales index declined by 8.7% in December, to its lowest level since October 2011. 'Fixed residential investment negatively contributed to GDP in the fourth quarter for the first time since the third quarter of 2010,' he says. 'Also, the Institute for Supply Management reported a significant slowing in growth in the manufacturing industry in December than the market consensus forecast.'
Most real estate industry observers say mortgage rates will rise significantly in 2014, to roughly 5% for 30-year fixed-rate mortgages. But others say rates will go higher, with analysts at the real estate website KeepCurrentMatters.com seeing rates climbing to 6% by year-end.
If that happens and fence-sitting buyers remain out of the market, they could regret it.
Here's one way to look at a $200,000 mortgage stretched over 30 years: At 4.2%, the monthly payment is $978 and total interest is $152,094. At 6%, the monthly payment is $1,199.10 and total interest is $231,677.
That's about $80,000 in extra interest loan payments over the course of the loan, and it's 80,000 reasons why buying a house now, rather than waiting a year, may be a great idea.