Interest rates rose this week. Hopefully this won’t be a continuing trend. Interest rates probably will rise when the fed backs out of the mortgage market which is supposed to be in a few months. Still, the current rates are really good. in the high 4s right now which is better than anything on that graph above.
I got the quote below from “Mortgage Market In Review” that I receive every week from Alice Roe of US Bank.
“The biggest fear of bondholders is inflation. Real or perceived, inflation erodes the value of fixed income securities causing prices fall and rates to rise. The last thing the struggling housing sector of the economy needs is escalating mortgage interest rates. Unfortunately comments from Fed Chairman Bernanke have many traders concerned that rate hikes are on the way. Bernanke indicated the Fed would follow a “rolling exit process” in which special programs run down and ultimately implement a tightening policy. He went on to mention raising rates and indicated the Fed will cut back and close emergency lending programs as the markets normalize. The reaction to these remarks was fast and furious as mortgage interest rates shot higher. While it is almost inevitable that the Fed will eventually raise rates, the question still remains when that process will actually start to occur. Many traders took Bernanke’s remarks as a warning of things to come sooner rather than later.”
In the same week we get notice that 30 year mortgage rates are lower than ever..
News also came this week that FHA loans will become tougher to get. They will cost more and require higher credit scores. Currently FHA loans are a huge part of our market. If they put these new restrictiions into place, and it sounds like they will, buyers will have a harder time getting a loan which will have an effect on house prices.
And finally, this same week, Alaska Housing Finance Corporation reduced the difficulty of getting loans with them. Hopefully this will blunt the negative effects of the tougher FHA standards.
We are living in interesting times. A quote from John Mauldin, (whose newsletter you should read), this week goes, “My basic thesis is, we’re going to see a pace of change that far exceeds anything human beings have experienced since the dawn of man. Furthermore, in terms of technology, that change is going to accelerate. We’re going to have multiple waves of technological change. It would be as if electricity, the steam engine, and the automobile all showed up at the same time. Boom!”.
Sign on to my .Face Book page for additional real estate updates
Get on the Deals Of The Week List….Foreclosure List….or Motivated Sellers list.
