Lower interest rates over the past few years have saved homeowners a lot of money, but how long will it last?
For the past several years, the Federal Reserve has aided the real estate community by maintaining the rate at which banks buy their money at nearly zero. To be clear, this is the starting wholesale point for lenders who borrow money from the Federal banks, and not the borrow rate for home buyers.
That being said, these low interest rates have helped maintain the real estate market through the worst of the most recent economic recession, and many claim that this strategy was one that staved off a major real estate collapse.
The Pros of Low Interest Rates
Of course, it sounds like we’re stating the obvious. Low interest rates are ALWAYS a good thing, right? It helps borrowers increase their purchasing power when buying a home, and allows homeowners the opportunity to refinance their mortgages at a lower rate. This saves both buyers and refinancers a ton of money over the long term. A win-win, right? Continue reading
Loan rates have not been affected despite more stimulus cuts by the Federal Reserve.
Some financial analysts were concerned that rates would begin to rise on the heels of the most recent cuts to the federal stimulus practice of Quantitative Easing (QE), which has dropped to $25 billion per month, down from its high of $85 billion at the beginning of this year.
This brings good news to home buyers concerned that economic conditions may spur rate hikes, which may affect their ability to qualify for their desired home loan amount.
Is it a buyer’s market?
While 2013 was a whirlwind market due to an extremely low inventory of available homes for sale in the Santa Clarita Valley, we’re seeing a balance this year as more homes are being listed with sellers still taking advantage of rising home prices. The median home price of a single family residence has risen $48,000 since January of this year. Continue reading
Is this a sign of a shift in the Santa Clarita real estate market?
The Southland Regional Association of Realtors released their statistics for the month of May, revealing that single family home prices made no gains over April. Currently single family homes are holding at a median price of $485,000 in the Santa Clarita Valley.
Condominium prices in the SCV did bounce upward nearly 6 percent last month, settling in at $281,000. Condos have had a bumpy ride in the past year or so, with a few ups and downs along the way. They had topped out briefly at $295,000 in November 2013 before taking a dip at the beginning of this year, but overall their median equity has increased by over 12 percent since January.
Condos may have gained more appeal in light of the fact that single family homes are becoming out of reach for many entry-level home buyers. Continue reading
The love triangle between stocks, bonds, and interest rates can make for strange bedfellows.
As industry professionals, we tend to throw these phrases around without considering whether anyone really understands what we’re talking about. In all honesty, what does this have to do with whether you can afford a home or not?
Well, we’ll take this opportunity to explain why news from the financial marketplace can affect your home purchasing power. First, let’s get a few definitions out of the way: Continue reading
Interest Rates Take Another Dip On The Heels Of News From The Federal Reserve
No one has a crystal ball, but experts who understand the mortgage market are usually pretty good at analyzing trends and making predictions regarding such real estate related issues such as interest rates and housing prices.
In this case however, many predictions have gone awry.
Last spring, mortgage interest rates took a one percent jump upward on the news that the Federal Reserve MAY reduce Quantitative Easing (Also known as QE). This made many investors jumpy, and they responded by selling shares of Mortgage-Backed Securities, giving rise to mortgage interest rates among other things. Rates settled at around 4.5 percent, where they’ve remained relatively stable since early last summer. By summer’s end, the Fed backpedaled on their statement, claiming they would hold off on making any changes to QE until they could better gauge the continuing national economic recovery. Continue reading
Home loan rates steadying after reassurances from the Federal Reserve.
Yes, it’s true. Mortgage rates jumped a full percentage point in June. This was in large part to the sell off of Mortgage Backed Securities (MBS) after Federal Reserve Chairman Ben Bernanke announced that the $85 billion monthly stimulus that guarantees these securities may eventually come to an end.
Last week, Bernanke sort of back peddled that statement by reassuring the finance market that the Fed has no plan in place to end the stimulus unless more positive signs of growth in the economy are achieved. These signs include the unemployment rate dipping to at least 7 percent by mid 2014.
In the past week or so, we’ve seen mortgage rates drop over two tenths of a percent from a three year high of 4.63 percent for a 30 year fixed loan on July 14th, back down to 4.41 percent on July 19th. Continue reading