Interest Rates: Up and Down

Last week in my blog, I mentioned that interest rates had moved up slightly.  Interest rates have been very volatile for the past two weeks. In the beginning of May, rates were hovering below the 6% mark but now the reverse is true. Yesterday's rates moved down somewhat due to the drop in the price of oil per barrel. Today's rate is quoted at 6.125%.

The Federal Reserve is watching home sales, the weak dollar and inflation very carefully. As of June 1, the Feds have taken on a policy of "watch and see". Wall Street is "betting" that interest rates will rise before the end of the year. Some feel it could be as early as October while others think there will be an increase no later than December.

The Federal Reserve, Economists and Wall Street are feeling more confident that the worst of the credit crush is over but at the same time, they are very concerned with inflation.

Historically, the Federal Reserve does not raise interest rates in an election year; but it seems that the recession which was being widely discussed just a few weeks ago, is being replaced by inflation concerns. If inflation fears become a reality, so will higher interest rates. If interest rates are adjusted upward, the consensus of opinion is that they will rise approximately ¼ of a point.

What does all this mean to you? Buyers are always concerned with "price and terms". If you are considering a home purchase, now may be the wisest choice in terms of a lower house payment. Prices in the Lake Houston area are still increasing in value, although home sales are not as robust as the past few years. Interest rates have begun to inch up and are expected to go even higher in a few months. Don't miss your window of opportunity.  Take advantage of today's home prices and today's rates.

I am not an economist, nor do I have a crystal ball and if the Feds aren't sure what they are going to do then I certainly don't know; but I can tell you that lower interest rates mean lower payments. I can also tell you that the days of lowering interest rates are most surely at an end.