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Isn't THAT Ironic?

So given the current housing and mortgage crisis, we look back and see what the FED has done to try and inject life into the housing market. In September of 2007 (yes, just 10 months ago) the FED funds rate was at 5.25%.

The FED panicked and lowered interest rates 6 times in 9 months down to 2.00% in an effort to stimulate the housing market quickly. Did it help? Not if you listen to the media, read the paper, or talk to most Realtors.

What will help?

Well, the general concensus is that business is picking up...albeit slowly. But why? Nothing has changed. Sure lenders have established short sale teams and REO teams and seem more willing to get deals closed than they were 12 months ago.

But what is the real reason? Could it actually be that interest rates are going to go up? The irony is that the FED spent 10 months rates to help housing but it is the threat of rising rates that is getting buyers off the fence.

Ironic...don't ya think?

Posted by David Bennett Yorba Linda Real Estate on 07/14/2008 05:44 PM

Comments (2)

fed, short sale, reo, fed funds rate, housing market

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2 Comments on Isn't THAT Ironic?

JUL

2008

David,

I think you may have a valid point in this. Perhaps the increase interest rates is making cautious buyers who have been waiting to make a decision actually decide to buy before rates get even higher - though we have to remember that rates are still very low in comparison to the last several decades.

I think this is related to the theory that people want to feel that they got a bargain and when rates appear to be rising it makes current rates a bargain, so they rush to take advantage since they don't expect them to come down for a while. It's not about historical lows... it's how low have the rates been lately that counts in the minds of consumers!

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