Refinancing rates have gone through a steady state of turmoil in the last few months. After dropping to all new lows month over month, increasing economic data has begun to show that they have an upward trend that may only continue in the next few years.
The Mortgage Bankers Association (MBA) predicts a heavy downward slope in the refinance market over the next 2 years, that may be helped by the new HARP (Home Affordable Refinance Program), that just debuted in the middle of March, but may not recover in full. Many government programs such as a VA refinance or an FHA Streamline Refinance – that help low income or military get into homes easily — continue to fund programs with efficiency, but eventually even that will not be enough to make up for a shrinking refinance market.
2012 won’t mark the resurgence of the purchase market, but it may mark the end of it’s downward slope. Again, the Mortgage Bankers Association predicts that 2013 will mark the first signs of life for the purchase market, revitalizing a real estate industry that was heavily impacted by a turmoil market state in the last few years.
New students thinking about buying a home should do so now, but only with heavy research and investigation. These recommendations and thoughts about the future state of the purchase and refinance market are only guesses, and many guesses have been made in the past that we have “hit the bottom of the housing crash” – only to see the new bottom arrive in the subsequent year.
If lucky enough to have purchase funds (or the VA or FHA benefits to get into a home), it may be worthwhile to take advantage of a soft market position now. However, there is still real risk attached to this investment (as well as any others), so you may want to hold off as real estate is an illiquid asset class that you may not want to hold early in life. It makes sense when you are settled and less mobile, but in volatile times where jobs are not readily easy to come by, it may make sense to adjust to a more sensible asset such as a stock or bond.