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