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Changes coming for home mortgage rates: Talking Points from the Fed

Real Estate Agent with Brush Real Estate

When you hear three of the most influential members...or past members...of the U.S. financial establishment putting out the same talking points it's time to sit up and take notice!!

Over this past weekend there was news that will affect home buyers and home owners that want to refinance.

Alan Greenspan started it all with a comment in a Bloomberg article that, "In the next two to three years, we are going to have serious problems."

The next voice to join the chorus was Kevin Earsch, one of the Federal Reserve Governors. His statement was, "Prudent risk management suggests that policy will likely need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary."

Take a CAREFUL note of the "Greater Force" comment....originally...before a revision...that was also attributed to Greenspan in the first Bloomberg article.

Finally, we get to Scott Alvarez, the Fed's General Counsel, who warned that, "audits of monetary policy by the U.S. Congress could lead to higher interest rates and reduced confidence in central bank policy."

Three different people...all important players at the Fed...all singing the same song...higher interest rates...and rate increases at a faster pace than we have seen in the past.

It should be pretty clear where we are headed!! Remember the "Greater Force" comment...my guess is we will be seeing a lot more of that one soon!!

So What Now...buyers or re-fi's would be well advised to "get while the gettin's good" ...a one point increase in the rate for a $300K loan wipes out a $50K price reduction in less than 5 years of payments...and after that the higher interest rate gets ugly fast...something like an additional yearly cost of over $1500.

$1500 is a start on a nice vacation...now let me think...do I want to take a vacation...or make some bankers wealthy...Hmmmm...

Here are the links to these articles mentioned in this post: http://www.bloomberg.com/apps/news?pid=20601013&sid=acVqrXjLdOP4




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