You came back?! Wow, I lost that bet - but glad you're here!
If you remember, I mentioned two weeks ago about the Federal Reserve stopping the purchasing of mortgage backed securities and how this will effect rates in the future. Well, we got some more news about rates last week.
Ben Bernanke, the Federal Reserve Chairman, said the Fed will be very vigilant to protect against inflation. You may wonder why that would impact interest rates? Inflation is the arc enemy of interest rates, and will push them higher, and all signs lead to higher rates over the next 2 years. The bottom line is that rates are already on the rise, and more than likely we will not see rates this low again in our lifetime. Keep in mind at this point in time rates are still very near historic lows – George Washington could not have gotten an interest rate as low as they are today, and this is huge if you are looking to buy a home. The difference between a monthly payment at 5% and a monthly payment at a rate of 7% can be as much as $320 per month (based on loan amount of $250k).
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Brandon is a branch partner at Alcova Mortgage. He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order. You can reach him at brandon@alcovamortgage.com, or 877-552-7150.
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When I bought my first home and had a 7.25% rate I thought that I had done well. Rates have been so low for so long that consumers are going to be shocked when rates are at 6.5%… hopefully that doesn’t further damage the economy.
The opportunity is right here, right now!
Doug, it shouldn’t damage the economy, but you’re right – they’ve been historically lower than any time in history, for longer than any time in history. Easy to forget that when the going’s been good. But in the long-term, I don’t think increased rates provide long-term instability – rather, I think it probably helps stabilize several markets, including housing.
Armchair economists, aren’t we?
As active real estate agents, we get to see the powerful late-night decisions home buyers or sellers make when they decide to move ahead. It’s exciting! But we also get to witness the disappointment when things don’t work out for financial reasons. We are more than just armchair economists because we get to observe these situations often at a client’s kitchen table.
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