Excerpted from an article by Terence Loose | Yahoo Homes – Fri, Sep 20, 2013, received from Teresa Lloyd, Loan Officer with Supreme Lending
As we come up from the bottom of the recent housing market crash, inventories are tight because many sellers are still able to wait to sell. Some potential buyers are uncertain whether or not this is the right time to buy, perhaps feeling that once inventory increases prices may drop again, among other reasons.
“There are several reasons why now is the time to buy,” says Jim Duffy, a mortgage banker with Cole Taylor Mortgage.
Reason #1: Interest Rates Will Rise
One problem with historically low mortgage interest rates is that they have nowhere to go but up. And a few months ago, that’s exactly what started to happen after a June announcement by Ben Bernanke, the chairman of the Federal Reserve Board.
Bernanke said that he may begin a slow wind-down of QE3 (Quantitative Easing, phase 3). This is the Federal Reserve’s program of buying mortgage-backed securities and treasuries from banks in order to encourage the banks to lower interest rates, and as a result, stimulate the economy. Immediately after Bernanke’s announcement, there was a sharp rise in mortgage interest rates of anywhere from a half to a full percent, says Duffy.
Duffy says Bernanke has backed off that statement a little since he first made it, and interest rates have settled a bit. But Duffy also says the QE3 program must end, and 2014 is the likely time frame for that. “And there’s absolutely no doubt that rates will rise once [Bernanke] does that. Rates only have one way to go when the Fed stops buying altogether, and that’s up.”
Wondering what rates may look like once QE3 does end? Duffy predicts they will be somewhere from 5.5 to 6 percent.
Editor’s note: You may or may not be aware that in the early 1980’s, interest rates peaked over 18%! Don’t let the recent interest rate moves stop you, rates right now are still historically low and any current rate is excellent, especially when viewed from the perspective that your rate can last for 30 years. If you’re sitting on the fence, don’t wait!
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