We like it when experts are wrong about their predictions.
We have been warned for many months that mortgage rates will likely rise this summer and loans near 6 percent will be the norm. Fortunately, the experts made these predictions before knowing a European debt crisis would hit and investors would flee to into the U.S. bond market for safety. Because of this, mortgage rates are incredibly low and rates could go as low as 4.5% this summer. The Wall Street Journal reports:
“A general rule of thumb holds that every one percentage point decline in mortgage rates is the equivalent of roughly a 10% reduction in the home price for the buyer. So, if the current rates hold, say economists, that could help stabilize prices and allow current homeowners to sell existing homes without substantial price cuts.”