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Is now the time to buy? Will rates go up?

By
Real Estate Agent with Keller Williams Realty Atlantic Shore
There has been a lot of changes with Fed cutting rates lately.
I asked our local mortgage expert Vince Daino from Northeast
Community Lending how this will impact home buyers.  Here's what
he had to say:

"Mortgage rates are moving targets.  Recently we saw rates move
to their lowest point since May of this year. This was in
response to stock market uncertainty and mixed economic reports
from the government.  However, in the last week mortgage rates
have given up some of the ground that they had gained in
response to a weak dollar as well as the Federal Reserve's
action to cut the Federal Funds and Discount rates by half a
point.

You may be asking, if the Federal Reserve just cut rates, why
did mortgage rates go up?  That is a good question.  The reason
is that the rates that the Fed controls have no direct
connection to mortgage rates.  In fact, a move by the Fed to cut
rates is often seen as bad for mortgage rates as a Fed rate cut
can usher in inflation which is bad for all bonds, mortgage
bonds included.

Another reason that mortgage rates rose in the past week is that
the Fed rate cut combined with the very weak dollar made holders
of bonds (mortgage backed securities) worry that the value of
their bond holdings would rapidly lose value in an inflationary
environment.

What does this mean to you?  Rates are still historically low
and right now so are home prices.  It is a very great time to be
a buyer in this market and given the instability in the bond
market it is a very good time to be a borrower because no one
knows how long rates will remain this low.  In addition, if
inflation is on the horizon, it is a great time to take a home
loan AND own real estate because inflation works as your friend
by devaluing the money you borrowed and making it "cheaper"
to repay.  In other words if inflation is on the horizon as many
fear, each dollar that you borrow today is worth less and less as
time passes.  Likewise, that same dollar costs you less and less
to repay relative to the inflated value of the dollar over time.

No one knows what the future holds, but one thing is for sure,
home prices are down, there are bargains in the market and home
loan rates are still very low making it a great time to be a
buyer."

Thank you and best wishes in your home search!

Matt

P.S.  We don't know what rates will be like in the future but we
do know that right now is a great time to buy.  Prices are down,
rates are low (for now) and inventory is up.  Please reply back
to this email with your name and phone number to receive our
free Home Loan Consultation where we go over the best home loan
options for you to take advantage of the current market
conditions.



--
Matthew Haviland
matthew@SearchAtlanticCountyHomes.com
609.916.7342 ext. 704
Toll Free:  866.254.5403 ext. 704

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Your Real Estate Consultants For Life

Office:  732-505-1101 ext. 154
http://havilandgroup.net
325 W. Water St.- Toms River, NJ 08753


Posted by

Matthew Haviland ~ matthew@HavilandGroup.net  ~ 609-484-9890 ext. 132

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Comments (2)

Vera Gleason
KW Vaca Valley - Vacaville, CA
Determined to Move You in Solano County

Matt,

 Thank you for the explanation of interest rates and the market.  As a Realtor, I know these things but can't explain as clearly as a lender can. 

I especially appreciate your assessment of the market right now.  It is a great time to buy.  There are some awesome deals out there and the interest rates are still very good.  Unfortunately with the media's doom and gloom, buyers are afraid to take the step towards home ownership.  We need to hear from more positive people like you and get the word to consumers.

Vera

Oct 11, 2007 03:31 AM
Matthew Haviland
Keller Williams Realty Atlantic Shore - Atlantic City, NJ

Thanks Vera,

I agree.  Our biggest challenge right now is educating home buyers and home sellers.  Everyone hears the negative national media but real estate is local and in our market there are great buys and homes that are priced right are selling quickly.

Matthew

Oct 11, 2007 07:49 AM