Rates will Climb and Mortgages will get Longer in 2006. That’s the word from the California Association of Mortgage Brokers.
Many believe 40 year loans will become more popular. This comes as a surprise to many Americans, but in fact in some parts of the world loans are paid off over many generations. Even if rates go up from their current levels, they’re still historically low. What’s making homes unafordable right now is mostly the large run-up in prices over the last three years.
We’ve had tremendous price increases, increasing interest rates, insurance rates, and property taxes. All are pressuring the first-time buyer at once, making homes largely unaffordable for those that missed the big boom. We’ll keep you posted throughout 2006 as to how the market performs.