In a report to their subscribers, Capital Economics reported that:
"The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment."
Why is this important? Last week, Forbes explained to their readers:
"If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don't increase with inflation)."
"During the week of October 7, Freddie Mac reported that mortgage rates had fallen to an average annual level of 3.94%. Assuming the use of a fixed rate mortgage with 20% down, this would make the median mortgage payment on a single family existing home just 6.9% of per household personal income, compared with an average of 14.4% since 1966."
Bloomberg Businessweek = U.S. Mortgage Rates Tumble to Lowest in More Than 50 Years "Freddie Mac records dating back to 1971 show the previous low for a 30-year fixed mortgage was 4.17 percent in November. Data from the Bureau of Economic Research measuring Federal Housing Administration loans indicate that long-term borrowing costs are the lowest since the 1950s, said Chad Wandler, a spokesman for Freddie Mac."
US Today/Money "Freddie Mac says the average interest rate on a 30-year fixed mortgage fell to 4.01% this week from 4.09% a week ago. This week's rate is the lowest since 1951.
The average rate on a 15-year fixed mortgage ticked down to 3.28%. Economists say that's the lowest ever for that loan."
Bottom Line: With low rates and rental markets being hit by inflation, now is the time to either buy a new home, or sell your existing property.
Our agents at Tahy Real Estate Group are here and committed to getting you the best deal out there.