Interest Rates: What Are You Waiting For?

I keep predicting that interest rates have bottomed out and that now is the time to buy or build.  I have been proven wrong over the past few months as interest rates continue to go down.  I’m old enough that I remember interest rates when they were in the teens (around 18%).  My first home purchase was in 1982. We thought we had a good rate at 12%!  Subsequent to that, mortgage rates were forever in the 7% to 8% range and that was considered the norm.

It hasn’t been until recently that rates in the 5% range started to appear and  become available.  15 year loans are below 4%, and 30 year rates are just over 4%.  If there ever was a time to buy or build, this is it.

We are fortunate, in that we actually have three homes in our queue to start-up for construction before winter and into early next year.  Most of these buyers have an existing house to sell, and are making the leap into building a new home. Lot prices are very competitive as the declining real estate market seems to have hit lots, as house prices in this area (Northwest Indiana) have stabilized to an extent.  These buyers have recognized that the interest rates may not be this low for quite awhile and are jumping on the home building band wagon.

The other trend we are seeing are banks that are willing to make construction-to-permanent loans which have the same interest rate through construction and into the final mortgage.  One bank we work with has even allowed the buyer to make a one-time interest rate adjustment for a nominal fee after the loan is ready to convert to the final mortgage.  The market  continues driving the rates and options this way.

Advertisement