Interest Rates are on the RiseMonday, October 26, 2009

All of you first time home buyers and current home owners that have refinanced have enjoyed the amazingly low interest rates we have experienced the majority of 2009. Being able to secure fixed rates below 5% will save you homeowners thousands upon thousands of dollars over the life of your loans. What is important for those of you who have NOT purchased your home yet or have waited to refinance until rates were even lower - it is time to make your move.

I will touch on the basics as to why NOW is the time:

• The Federal Reserve is going to stop buying mortgage backed securities soon. Currently, the government is buying 80% of these bonds. These bonds are comprised of the mortgages you and I have on our homes. The investor demand for these bonds directly correlate to the rates on the mortgages. With the government stepping away from these investments, the large supply and largest buyer being removed will drive interest rates up.
• Inflation is becoming the main concern with the Fed, and they will soon be looking at increasing the Federal Funds Rate. This increase will trickle through the economy and create an increases on all forms of lending as money becomes more expensive to obtain.
• The government is issuing more and more debt to pay for the stimulus plan and these debt offerings compete with mortgage bonds for investor dollars. This will also bring the demand down and cause rates to move up as a result.

The great news is that home prices are still low, rates are still low and you can still purchase and refinance with low down payments/equity in the home. Be sure to take advantage of the great opportunities available.

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