Will interest rates ever rise?

OK on that I see your point on waiting for prices to drop.

But not necessarily because of higher interest rates, though there is a point there.

But because, as you said earlier, there are many foreclosures that still have to be completed.

If they all went through now, the market would be flooded with inventory and prices would drop.

Also, a lot of people are sitting on their homes that want to move but can't because they are under water. This keeps inventory low. As they further pay down their mortgage or finally just decide to list it as a short sale, more houses go on the market forcing supply up and prices down.

Interest rates could stay this low for 20 years yet these other factors could force prices down.

Low prices with low interest rates makes for an even better mortgage for you.

Unless we have some very good economic growth, I think there are more forces that send current housing even lower before higher.

X-Runner, you're right, there's lot of other factors that could keep prices down even with high/low interest rates.

Here's the link to Japan's interest rates.

http://www.economagic.com/em-cgi/data.exe/bjap/ehdis01

And here's the house price index.

http://blogs.reuters.com/felix-salmon/2010/01/12/house-price-chart-of-the-day/

Even with interest rates keep declining, housing prices have steadily gone down relative to inflation.

Even if I could get a home mortgage with below 4% interest rates, and housing stays flat or declines, that's a loss for me.

One another note is, it's great that if I could time the market and buy at the very bottom, but that would mean that I would be buying at when prices are on a downtrend. Which means it's the riskiest, but return's the greatest.

If I would wait until upward trend, my return would not be the greatest, but at least my risk level is not as high.

Dick Doobey wrote:

Would you go straight to a 20-30 year fixed? I'm considering a 10-1 ARM to get 3.875 for 10 years, but I'm wondering if 30 @ 4.125 is a better bet for the future.

Lender I'm talking with would keep the 10-1 as a portfolio loan and 30f would go to secondary market. Makes me wonder if he's urging me towards the ARM for his personal benefit.

Curious to get a few opinions on a 10-1 ARM right now.

Thanks!

pics of my wife for good advice :P

A 10-1 ARM is not bad, and neither is 30 year fixed at 4.125%, but if asked to choose, I would go with the 30 year fixed. There is great peace of mind knowing that your payment cannot go up, and you're only saving a quarter of a point with the ARM anyway. What is your credit score? Mine is 714, and I am currently refinancing with Wells Fargo for 15 years at 3.25% fixed. If your credit score is near mine or better, you need to push your lender to give you a deal like mine.

if you are ready to buy, then wrote:

A 10-1 ARM is not bad, and neither is 30 year fixed at 4.125%, but if asked to choose, I would go with the 30 year fixed. There is great peace of mind knowing that your payment cannot go up, and you're only saving a quarter of a point with the ARM anyway. What is your credit score? Mine is 714, and I am currently refinancing with Wells Fargo for 15 years at 3.25% fixed. If your credit score is near mine or better, you need to push your lender to give you a deal like mine.

We're in a 15 fixed now (4.375%), with about 11 years left. I kind of wish we were staying here, but we're moving to the place we want to be long term, so it makes sense for us.

I'm kind of leaning towards the fixed, but for right now 15 isn't as comfortable as I'd like. We're upgrading about $50K, which is a little tough at the moment.

The reason I'm not terrified of the ARM is that we're still both in our early 30's and our income will continue to grow, making the possibility of refinancing into a 15 year fixed within 5-10 years very possible, maybe even likely. Of course, we will be at the mercy of the rates when that happens.

Our scores are 730 and 728, so really good, but just shy of the 740 which gets the very best rates.

Mortgage guy makes some good points to explain that rates really can't go up without really crippling the country, but who really knows what the future holds. I think he wants us in the ARM because it stays in his portfolio rather than selling to secondary market. Maybe I need to shop some more for a sub-4 fixed.

Called my bank today because I am refinancing and I can get a 30 yr fixed at 3.75% with no points. I locked it in you aren't going to do better than that at any point in your life.

I didn't read any responses after the first post so forgive me if some one already said this.

Interest rates will rise when more people have jobs and the unemployment rate drops.

When more people have jobs, they will buy houses. We had a huge oversupply of housing and there is still a large shadow index that we will have to get through.

But once more people have jobs, people will fear inflation and demand more yield. Then interest rates will go up.

So job growth and Europe are the two biggest factors to watch if you want to look for an uptick in interest rates.

If Europe gets its shfit together, tons of people won't be buying long term treasuries. They will feel more comfortable putting their dollars in Europe and rates will pick up.