State mortgage group issues forecast
East Bay Business Times - 1:22 PM PST Tuesday, 12/6/05
State mortgage group issues forecast
The California Association of Mortgage Brokers predicted that mortgage rates will hit 7 percent for 30-year fixed-rate mortgages in the coming year and that 40-year fixed-rate loans will become more common.
More than 80 percent of member brokers surveyed in an annual forecast released Monday believe interest rates will continue to climb.
“A moderate increase in mortgage rates should not concern home buyers,” said John Marcell, president of the association, in a statement. “However, it is alarming that the housing affordability crisis will continue, making it difficult for first-time home buyers to qualify for adequate financing.”
The forecast also said that housing affordability will remain a challenge for many Californians, even though the market is not as red hot and despite the fact that prices are expected to stabilize.
In its fourth membership survey, 60 percent of the brokers believe that 40-year fixed loans will be more economical as well as accessible for home buyers next year. And reverse mortgages, 100 percent financing and adjustable loans with low “start rates” or beginning interest rate from which the rate can fluctuate also will remain popular.
But Marcell sounded a note of caution: “As home buyers prepare for 2006, they must be educated about which loans will work best for their financial situation. Alternative loans make the dream of home ownership a reality for some consumers, but it is important to realize they are not for everyone and there can be pitfalls.”
The survey from the mortgage brokers’ association was conducted in November and 300 members responded.
