This week one of my home buying clients locked in her interest rate at 5%. She was overjoyed and I was surprised. Why was I surprised? Because I think the days of 5% interest rates are not long for this world. The super low rates we have seen for the past year or so are forecast to shortly be things of the past. Everything I read and am told by local mortgage bankers points to a soon to be rise in mortgage interest rates. There are several reasons for this forecast.
The Federal Reserve's program to buy mortgage-backed securities will end on March 31, 2010. These purchases by the Federal Reserve have provided a ready market for these securities. When this program ends other investors may well expect higher interest rates to buy these securities.
Another reason mortgage interest rates may head higher is that treasury yields have turned higher. All of us in the real estate market know that mortgage rates are always higher than treasuries. Treasury yields have jumped almost 20% since the start of December, 2009.
With the economy supposedly on the rebound the stock market and similar forms of investment may prove to offer higher rates of return that the current rates on mortgage backed securities. Please remember that money chases money and that investment dollars will go where there are more dollars.
All-in-all with home prices starting to slowly creeping upward, interest rates forecast to rise and a target date for ending the home buying tax credit in place now may well be in last opportunity to take advantage of an opportune real estate market. Remember the old saying "He who hesitates is lost".
I hope you have a great day!! Please remember when you think Lake Conroe real estate think Ron.
Ron Wickes
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