5% Interest Rates will be ending soon!

5% Interest Rates will be ending soon!

The Federal Reserve, in a move aimed at keeping interest rates low for home buyers through early next year, decided to extend and gradually phase out its purchase of mortgage-backed securities. (WSJ 9/23)

Read between the lines.  The purchase of mortgage-backed securities is what sparked the significant drop in rates last Spring.  ”Phasing them out” will allow interest rates to rise.  Remember a 1% rise in rates is equivalent to a 10% increase in purchase price over the life of a mortgage!

The perfect buying storm:

  1. $8,000 tax credit
  2. Historically low interest rates
  3. Historically high afford ability (prices back to 2003-2004 levels)