Jun 20
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I’m sure you’ve heard by now that interest rates for home mortgages have been quite volatile the past few weeks with the overall trend being higher rates. At first I was disappointed because I thought higher interest rates would slow down home sales. But the more I thought about it, I realized this a good thing.
Interest rates are still better than they have been for most of the last thirty years. Interest rates are rising right now because there are a lot of economic news that indicate the economy is improving. Consumer spending for the holidays is up this year. And although the quantitative easing by the Federal Reserve was announced as a program to lower interest rates (which it has not done), Ben Bernanke has made it clear that is he will continue doing whatever it takes to get the economy going again. Although quantitative easing has not lowered rates, the marketplace is believing the economy is and will continue to improve. A rising economy will encourage people to get back into the marketplace and make that move they have been putting off. This is all good stuff!
Happy Holidays!
Larry Saunders
I wanted to send you a note with a some observations about Quantitative Easing 2 (QE 2) which is all over the news media. The Federal Reserve has made it clear they plan to purchase $600 billion of bonds in an attempt to lower interest rates as a way to bolster the economy. I have talked with several potential home buyers in the past two weeks who told me they wanted to wait for the lower rates before they moved ahead with their planned home purchase. However, the bond markets are having a different reaction to QE 2 than what the Fed had in mind. Interest rates for home mortgages are still great (low to mid 4′s for 30 year rates), but rates have been trending upwards for the past week. It appears that bond investors are concerned that QE 2 is potentially inflationary and this concern is pushing rates up instead of down. I don’t think rates will move up much
But it looks highly likely that rates will NOT move lower. If you are a potential home buyer who is waiting for rates to get better, it appears to me that you will be disappointed. Right now would be the best time to take advantage of the lowest interest rates we have seen in our lifetime.
Larry Saunders