No time like the present for buyers Low rates expected until inauguration

November 15, 1992|By Gertha Coffee | Gertha Coffee,Cox News Service

ATLANTA -- If you like playing it safe, the best time to purchase or refinance a home may be between now and Inauguration Day.

Mortgage rates are expected to stay reasonably stable until President-elect Bill Clinton takes office on Jan. 20, some experts say. But that may change once he's in the White House and attempts to stimulate the economy.

"We will see interest rates rise," said David Lee, a Robinson-Humphrey Company Inc. analyst.

Some economists, however, think mortgage rates will not rise much higher than they are now -- and may even fall again early next year.

The average for a 30-year, fixed-rate mortgage in metro Atlanta is now at 8.23 percent, compared with a low of 7.69 percent in September, according to Bank Rate Monitor.

"People are going to have another shot at refinancing, primarily because the markets have overjudged the Clinton package," said Donald Ratajczak, a Georgia State University economist.

He said the financial markets, in anticipation of a Clinton victory and increased government spending, have responded with higher rates. But he expects fixed rates to fall by half a percentage point early next year -- largely because inflation will be held in check.

Of course, no one really knows. That's why your best bet may be to lock in a fixed-rate loan now, said Robert S. Robbins, a market strategist at Robinson-Humphrey.

"There is a greater case to be made for doing a fixed-rate mortgage now than there was under the Bush administration," he said.

"If you can stand the risk, take a variable-rate mortgage, because over the life of a mortgage, short-term interest rates are likely to remain lower than the fixed rate. But if you can't stand the risk, take a fixed-rate because there was a very strong rise in interest rates the last time we had a Democrat for president."

Mr. Robbins also thinks it might be wise for first-time buyers to wait until Clinton takes office before buying a home. His administration may try to stimulate sales of low- and moderate-priced homes through a tax credit for first-time buyers.

Besides tax credits, rates and price, there are other factors to consider if you're thinking of buying a home, including:

* Do you really want to own a house? There are people who would rather avoid the responsibility and expense of maintaining and improving a home.

* Buy the house as a shelter, not an investment. "I don't think we will see a boom-time housing environment where people buy a house for $100,000 and go out and resell it for $200,000," Mr. Lee said.

* How much will you save on your taxes by being able to deduct your mortgage-interest payments? Some experts think homeowners -- especially wealthy ones -- may get a lower deduction under the Clinton administration.

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