Is this it?
Is this the turn in the market that we have been telling buyers about?
Are interest rates heading up?
Is it truly time for buyers to get off the fence and take that step to buy NOW before rates go up?
This week the Federal Reserve opted not to cut the Fed Funds Rate again.
In the past, a cut in the Fed Funds rate often times was followed by a drop in mortgage interest rates. However, that has just not always been the case, recently, as there has been so much money lost in all sectors of the banking and real estate industry. We have seen rates sometimes fluctuating on a daily basis.
But, what about the Fed's decision this week? The Fed has been aggressively cutting interest rates, hoping to avoid recession. They opted to not cut the Fed funds rate at all.
What does this mean to the real estate market?
Is this a sign of what's coming next?
We are now hearing that the government is concerned about inflation.
Buyers have been asking the same question, Is it Time to Buy? I say yes!!!!
Today, with higher gas, food prices and energy costs we have the risk of inflation spreading. Thus, we are hearing rumors that the next move for the Fed may very well be to increase the Fed funds rate before the end of the year!
Will mortgage rates go up with a Fed funds increase, too?
And then, how much after that?
If this is the case, buyers in areas experiencing price declines and market corrections that are waiting to buy may not benefit AT ALL from waiting for prices to continue downward. They could be faced with higher interest rates, thus affording them less house for their money spent.
I have heard reports that the Fed could start raising interest rates as early as their August 5 meeting or their December 16 meeting. Some are saying no, that this won't happen. That this may be too big a blow to our already shaky economy. Some feel that we may not see rate increases until sometime next year. But, sometime WHEN next year? They're not disputing that rates will be going up to ward off inflation.
In my opinion, it's time for buyers to get serious about getting into the market and buying that house they've been waiting for, NOW.
If only we had a crystal ball to predict the future...