NEW YORK (MainStreet) — It is often said that the real estate market lags behind the rest of the economy in times of growth and recession, and with six months under the bridge since the recession officially ended, it’s a good time to take stock of where we are.
Trends in the mortgage market are showing more bad than good outcomes, and the chances of them strengthening as the year rolls on are very high. Here is what prospective homeowners can expect in 2011.
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Mortgage rates on the upswing.
Borrowers may look back at 2010 as the salad days for mortgage interest rates. Back in the fall, a borrower with good credit could count on an interest rate below 5%. That was then and this is now. Going forward, most economists expect interest rates to rise from about 5% in early 2011 to almost 6% by the end of the year. Right now, the average 30-year fixed mortgage rate, as measured by the BankingMyWay Weekly Mortgage Rate tracker, is at 4.9%. Expect that number to trend northward as we go deeper into 2011.
New mortgages will decrease.
Despite reports in the media that the economy is getting better, mortgage customers just aren’t buying it. Literally. The Mortgage Brokers Association reports that new mortgages are trending downward, meaning this could be the year of the “reluctant buyer”.
Online mortgage shopping will grow more prominent.
Home buyers seem to be taking to online mortgage sites like BankingMyWay, LendingTree.com and QuickenLoans.com like bees to honey. Lending Tree reports that 21% of consumers shop first for mortgages on the Internet. Look for that number to jump further in 2011 as budget-savvy consumers go for the lowest rates they can find – and right or not, they increasingly think they can get that deal online.