It's the bright side of the bleak real estate market.
"It's hard to see the possibility of losing on a home purchase right now, with these mortgage rates," said economist Dean Baker, who in 2005 predicted a decline in the government's home-price index that now is within 2 percentage points of his forecast. "Prices may go lower, but not by much. Even if they do, you're still getting a good deal."
The lowest mortgage rates on record, coupled with a new Federal Reserve program to reduce them further, are turning housing bears like Baker into optimists. Loan payments on a home financed at last week's 4.09 percent average 30-year U.S. rate would be lower than the bill for a property purchased next year after a 3.5 percent price decline and a half-percentage-point rate increase, a scenario forecast by the Mortgage Bankers Association (MBA) for mid-2012. (The average 30-year rate dropped again this week, to a new average low of 4.01 percent, Freddie Mac said Thursday.)
Assuming a 20 percent down payment, buying a $300,000 home at current rates means a monthly mortgage bill of about $1,158 (excluding taxes and insurance). Delaying a purchase until next year would put the tab at $1,186, based on the MBA forecast for prices and rates. That amounts to an $18,000 difference over a 30-year mortgage for those who wait.
Regardless of the rate, most Americans seeking to buy houses need to qualify for loans. Mortgage applications for home purchases rose 2.6 percent last week, the fifth consecutive gain, the MBA reported Wednesday. Fannie Mae and Freddie Mac, which securitize about two-thirds of new U.S. mortgages, have enacted the strictest qualification standards in more than a decade.
