January 31, 2008
It has been my pleasure to be a resource for your real estate activities. I wanted to blog on the state of what I am seeing in the market to my valued customers.
With the Federal Reserve cutting short term interest rates over 1 ¼ points in the last eight business days many peoples understanding of thirty year mortgages are inaccurate.
Let me explain, with short term interest cuts the Fed is trying to avoid a recession by helping people with auto loans, lines of credit on their home, credit cards and business loans at banks, decreasing their monthly payments and spurring additional cash flow to put back into the economy.
What people tend to misunderstand is that thirty year mortgages are tied to the bond market. When the bond market senses inflation going up, it typically will make mortgages rise. As the Fed reduce rates, cash flow increases, making inflation a concern, therefore we feel long term rates or thirty year mortgages will start to rise once the government turns its attention to inflation worriers.
In general we feel that we have a short window of three to four months to take advantage of both low mortgage rates and discounted prices on homes. If you have any further questions please feel free to use us a resource in all your real estate needs.