This was supposed to be the year that Herb Harrison found a newer, bigger home to replace his current house in Framingham, Massachusetts. Then, in May, mortgage rates began to rise and he put his hunt on hold.
“My wife and I looked at each other and said ‘no way,’” said Harrison, who works in information technology. “It was something we thought about when rates were at rock-bottom, but once the rates spiked, we decided to stay where we are.”
Now shoppers like the Harrisons are getting another chance, thanks to Federal Reserve Chairman Ben S. Bernanke. After five months of public speculation about when the Fed would end its housing stimulus sent mortgage costs to a two-year high in September, the U.S. central bank last week pledged a continuation of the bond buying responsible for last year’s all-time low 3.36 percent for a 30-year fixed loan. Interest rates may now hold at close to 4 percent through early next year, said Joel Naroff, president of Naroff Economic Advisors.
“People who were priced out of the market by the jump in rates are getting a do-over,” saidNaroff, based in in Holland, Pennsylvania. “Rates aren’t going back down into the low 3s, but we may see the high 3s and we’ll see those rates remain stable through at least February or March. That’s going to restore buyer confidence.”