Well, we are now officially in uncharted waters! Not only did the Fed lower the Fed Funds rate to just about ZERO, but the 10 year bond which historically lead mortgage rates, also dropped throught the floor.
The below chart really tells the story, it is a chart that goes back to 1962. As you can see, rates have now dropped significantly lower than they were when my Dad bought his first home. This is amazing.
As I posted yesterday, when fear subsides in the financial markets, the spread between the 10 year bond and mortgage rates will narrow. We may actually see 30 fixed rate loans in the high three to low four percent range.
Yesterday, someone commented on my blog with a comment that read, "Beware of Realtors that tell you now is the time to buy".
This was unfair in my opinion! I am not supporting the Feds position, nor am I suggesting we will not pay for these low rates in other painful ways in years to come. It could be via inflation, increased deficit or further devaluing of the dollar. My point is to say that rates have never been this low and I am not sure how much lower they will go. Yes low rates can create inflation, which again is a good reason to own real estate.
I cannot or will not predict when at what pace the housing market will turn but I can tell you, my 25 year old daughter and all her first time home buying friends are getting VERY excited.
Please let me know if you have any questions on the graph. I would also be happy to answer any questions you may have regarding purchasing Real Estate in Newport Beach, CA, Newport Coast, CA, Costa Mesa, CA or Irvine CA.
Please visit one of my sites for more info