If you're in the market for a new home, now is the best time to buy. Mortgage rates are at historic lows, and home prices have bottomed out in most markets. This is a good week to buy a house!
Volatility in the stock market has investors looking for safer places to stash their cash this week. Despite the downgrades, many investors fled to the relative security of long term U.S. Treasury Bonds, pushing down rates.
Rates for mortgages and other consumer loans tend to mirror the movements in the U.S. bond market. The rates on 30-year mortgages are highly correlated with the rate of the U.S. 10-year Bond. Despite Standard & Poor's downgrade of U.S. debt Friday night, investors still fled to long term U.S. Treasuries Monday through Thursday. The 10-year Treasury bond rate is at all time lows.
Tuesday’s decision by the Federal Reserve to keep the target federal funds rate low until 2013 was a result of considerably slower economic growth. This is the first time the Fed has pegged its low rate to a date and the announcement of the timeframe was aimed at calming nervous investors. A low rate is supposed to stimulate economic growth by making it cheaper to borrow money for consumption or investment. When investors have confidence in the market and have the ability to borrow, money flows out of long-term treasuries into stocks, bonds and commodities. Ultimately, this will causes mortgage rates to rise.
While people continue to worry about the market conditions, U.S. Treasury securities will remain attractive to anxious investors. There is no telling when mortgage rates will go up or how far they will rise. Homebuyers with stable incomes and job security should take advantage of the low 30-year fixed rates now. Buying a home now can allow you to make a significant positive impact on your long term net worth.
Click here to view our move-in-quick homes!
Comments(0)