If you're planning to buy a house later this fall and you're worried that mortgage interest rates might go through the roof in the meantime, stop fretting.
Metropolitan Washington rates - as well as those for most markets around the country - are holding steady and should continue to do so for at least the next 60 days.
The gyrations of spring and summer 1977, which saw prime mortgage interests rates go from 8.5 per cent to 9 per cent in many areas, aren't likely to be repeated, unless the Federal Reserve Board puts an unexpected squeeze on the money markets.
The outlook for the fall home buying season goes pretty much as follows:
Locally, prospective purchasers can count on mortgage rates that range from 8.75 per cent (for an 80 per cent loan under $75,000 from a variety of savings and loan associations, including Perpetual, the biggest) to 9.25 to 9.50 per cent for lower down payment, 90 per cent and 95 per cent loans, usually with a "point" or two thrown in up front. (A point is the equivalent of 1 per cent of the principal amount of the mortgage, paid in cash to the lender at the time of settlement. Points are assessed to increase the effective return on the loan to the lender.)
Many Washington area lenders have higher rate structures for large, high-ratio loans - witness Bethesda's Government Services Savings and Loan's 9.75 per cent minimum for a loan of between $75,000-$90,000 on a Maryland property with a 10 per cent own payment. The same lender offers a surprising 9 per cent (plus one point to the seller, one to the buyer) for a $250,000 mortgage with a 25 per cent own payment on a house in suburban Virginia.
Rates on investment loans - to finance the purhase of property to be rented out and held for capital appreciation or tax shelter - remain around 9.75 percent, with one or more points. Not all lenders are offering mortgages in this category, however. Perpetual, for example, is accepting no investor loan applications.
Nationally, home mortgage rates in most major cities will be in the same range as Washington's, or slightly lower. Chicago's prevailing rate for an 80 per cent $50,000 to $60,000 mortgage is 8.75 per cent. Rates in the South and Midwest are about the same, while California's are at 9 to 9.25 per cent. (California's present rates represent a decline of 0.25 to 0.50 per cent from the zany spring, when home seekers would pay anything - to lenders as well as to home builders - for the dubious privilege of a new house with an inflated price and mortgage.)
The principal mortgage lenders on single-family housing - the nation's savings and loan associations and savings banks - continue to have adequate inflows of new deposits to support high levels of lending for the coming quarter year at least. A few S&L executives, such as Richard Reed, vice president of Washington Federal Savings and Loan Association in downtown D.C., are skittish about the possibility of sharp rises in short-term interest rates in September-October, which could have the effect of siphoning deposits out of savings accounts and into better yielding investments.
But most economists forsee only modest jumps in short-term rates, if any, and little chance of outflows. The S&L industry's major trade association, the U.S. League of Savings Associations in Chicago, predicts $50 billion in net inflows for 1977 - an all-time record.
Beyond October, the crystal ball begins to fog up, and analysts part company. Some economists, like John Wetmore of the Mortgage Bankers Association of America, see the possibility of mortgage rate declines late this fall, thanks to the success of federal policies aimed at keeping the inflation rate down.
Others project at upturn, based on the opposite assumption: a gradual heating up of the national economy and the failure of federal policies to keep the inflation rate down below 6.5 to 7 per cent.