Rumors had circulated for more than a year that the end was in sight and on Wednesday of last week the Federal Reserve announced that "QE", (Quantitative Easing, the purchasing of Treasury Notes and Mortgage Backed Securities), which brought mortgage interest rates to historic lows, had finally come to an end.
This story, which was well covered on the various financial news networks, probably went unnoticed by most local media. It couldn't compete with fire, sex, crime or celebrity gossip.
And while it may have seemed a dry or irrelevant story for local newscasts, the end of "QE" will have a profound effect on most home buyers and sellers, local real estate markets and our national economy.
The Federal Reserve currently holds more than $4.5 Trillion of these financial instruments and the good news for mortgage interest rates is --- they plan to hold onto them.
Why is that good news? Because holding onto that enormous portfolio limits supply and generates a downward pressure on interest rates.
Will it be the same intense pressure that the Feds generated by their monthly purchases? No, but while mortgage interest rates will begin to rise they won't rise overnight.
So what do rising interest rates mean for buyers? Less home for your money. As interest rates rise the purchasing power of home buyers shrinks.
What do rising interest rates mean for sellers? Fewer potential buyers. As interest rates rise the number of buyers qualified to buy your home shrinks.
How high and how quickly will mortgage rates rise? ---- we'll know when it happens.
The real question is -- will you take advantage of the great interest rates that are currently available and buy that home you've been wanting or list that home you've been wanting to sell.
If you're thinking of buying or selling a home in the Phoenix/Scottsdale area I offer a Free, No Obligation Consultation in person or by phone. As an informed buyer or seller you'll make better decisions.
E-mail Nancy@NancyLaswick.com or call (602) 793-1627
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