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Good Sign for the Economy but Watch Out for Interest Rates

Economists expected today's jobs report to reflect a loss of 328,000 jobs. Unexpectedly, the job loss was "only" 247,000. Some are interpreting this as a stabilization of the economy. The unemployment number ostensibly declined from 9.5% to 9.4% - although this figure doesn't reflect the underemployed, or those discouraged people who have stopped looking for jobs.

Although this is a good sign for the economy, it also brings with it the prospect of future inflation and its companion, higher interest rates.

First time home buyers should note also that the $8,000 First Time Home Buyer Tax Credit only extends through the end of November.

With the prospect of higher interest rates and the end of the tax credit program nearing, Lancaster County buyers should consider taking advantage of the still plentiful inventory of homes and current low mortgage rates.

©BrianSchulman2009

Brian Schulman offers expert real estate representation for buying and selling homes in Lancaster County, PA. To learn more, visit http://www.FindLancasterHomes.com/

Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA. To learn more, visit http://www.FindLancasterHomes.com/

Posted by Brian Schulman - Your Lancaster County, PA Real Estate Professional on 08/07/2009 05:00 PM

Comments (4)

Good Sign for the Economy Foreshadows Higher Interest Rates in the ActiveRain Channel

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Originally posted at: Lancaster County PA Realty Check: Good Sign for the Economy but Watch Out for Interest Rates

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4 Comments on Good Sign for the Economy but Watch Out for Interest Rates

AUG

Brian great reminder for First Time Buyers. Yes if the economy improves the interest rates will be on the upswing.

AUG

Now watch out for massive inflation as all this crazy spending start infiltrating the economy.

Brian - Perhaps due in large part to the economic conditions in the past year and a half or so, interest rates have remained low. A lot of folks in our industry expected them to be in the 7's two years ago. The banks and lenders can't possibly keep lending money at these low rates, especially considering the rate of foreclosures. They'll need to pad their loss reserves with higher rates, at least that's what I think. For those in the position to act now, they should be acting like that fence they are sitting on is an electrical one.

Jennifer, I know it may look like a "sales pitch" to buyers, but there is ample historic reason to believe that massive government overspending will cause massive inflation down the road - which will in turn cause much higher interest rates as lenders seek to recoup the loss of value of the dollars they get repaid in.

Rob, I totally agree - sooner or later the expection of inflation, if not the inflation itself, will force interest rates up.

Jason, good point - lender losses due to foreclosures will be another factor in boosting mortgage rates. I like the way you phrase sitting on the fence - those who do so are likely to get a shock!

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