Borrowers Dodged Higher Rates For Now….
Rates could have shot up this past Wednesday if the Fed announced the tapering of its bond-purchasing program….but instead the said they “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases,” the Fed’s statement reads. This will at least keep rates from increasing for now, but might even cause them to drop.
We got a glimpse into how much power the Fed has over mortgage rates in May. The went up over 1% after Fed Chairman Ben Bernanke announced that the central bank might trim the bond-purchasing program later this year.
For now, the Fed said they will continue to purchase $40 billion/month in mortgage bonds and $45 billion/month in longer-term Treasury securities. This practice has historically kept rates low but at some point this subsidy will decline, at which point rates will likely increase quickly.
Don’t wait. Now is the time to buy. I know it’s a cliche but we saw what a 1% spike does to the “affordability” of homes. Some buyers got priced out of the market as rates increase so quickly this summer, while others compromised on less than their dream home because they were limited in price due to higher rates/higher payment. When the Fed eventually DOES taper back their purchase of these bonds rates WILL go up and we don’t know when this will happen. It’s been said that rates go up like a rocket and fall like a feather!
HOMEOWNERS THINKING ABOUT REFINANCING
If your rate is higher than the current rates (approx 4.5% as of the date of this post) or if you have an adjustable mortgage you could likely save money by refinancing. Talk with a Mortgage Professional ASAP to do an analysis and see what is the best decision for you.
NEWS OFFERS RELIEF TO NEW HOME BUILDERS AND BUYERS
This announcement has helped give HomeBuilders a bit more confidence for the near future. Many builders scaled back their end of 2013 forecasts as rates skyrocketed and buyers began to have challenges qualifying with the higher payments that come with higher rates.
ARTIFICIAL LOW RATES WON’T LAST FOREVER
Once the Fed lets the market fluctuate on its own, many experts believe they will settle around 5%-6%. There is no telling when this will happen but the next Fed meeting is scheduled for 10/29/13.
If you are on the fence -get off it NOW! Give me a shout if I can be of any help