Are Interest Rates Headed Up?

by Cal on January 24, 2010 · 4 comments

in Alabama, Georgia, Gulf Coast Mortgages, Real Estate

Are Mortgage Interest Rates Headed Up?

Are interest rates headed up?

Most experts are saying, yes. The Federal Reserve has been artificially keeping rates low for the last year. At the end of March, The Fed has announced they will quit buying Mortgage Backed Securities, which will cause rates to rise. Financial experts are saying rates may rise for 1-1.5% and that it could happen in short period of time. This could be devastating for a home buyer.

If rates rise 1%, you could see your purchase power decrease by 10%. On a $250,000 home, that is a $25,000 drop in the amount of home you can purchase. What about if rates go up 2% and rates end up in the 7’s? We are talking a 20% decrease in purchase power, or in our example, fifty-thousand dollars!

Now is the time to buy. Take the $8,000 tax credit for 1st time home buyers and couple it with the low rates that The Federal Reserve is giving us and you are talking about a nice gift from the government. Right now, you have the best incentives in history to buy a home, but they are likely going away. In order to get the $8,000 tax credit, you have to be under contract by April 30th 2010. With the possibility of rates going up toward the end of March, you would need to act now. It can take a month or more to find the right home and a month to close on your home loan. Don’t let this opportunity pass you by.

Toby R. Lane
Senior Loan Consultant
Academy Mortgage Corporation

Direct: 404-574-2609
Cell: 404-483-6040
eFax: 404-924-4990

www.atlantagamortgages.com

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Tagged as: academy mortgage corporation, federal reserve, financial experts, home buyer, home loan, incentives, loan consultant, mortgage backed securities, mortgage interest rates, tax credit

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{ 3 comments… read them below or add one }

1 Gary Sattelberger January 30, 2010 at 1:48 pm: Good advise. Now may very well be the best time to buy a home for quite some time.

Unfortunately, the Federal Reserve Bank and the Treasury Department’s timing for stopping the purchase of mortgage backed securities, which are keeping interest rates down, coinciding with the end of the first-time home buyer tax credit could very well stop the momentum in the housing market here in the Phoenix area.

For home buyers an increase of 1-1.5% in the interest rate could make the difference between qualifying for a mortgage or not. Not to mention the amount home buyers will pay in additional interest over the life of the loan.
2 Moraira Property March 7, 2010 at 12:27 pm: The Bank of England & the European Central Bank have both left their rates unchanged this week. Much of the commentators are expecting rate increases in the last quarter of 2010. Hopefully they are right.
3 Frank from Corporate Serviced Apartments March 31, 2010 at 2:28 am: Do not you think this is a marketing trick so to create artificial demand for taking loan from federal reserve? Abandoning purchase of mortgage backed securities can be one of their steps. whatsoever one should follow whether there is enough competition among banks in providing lower interest rates to customers for mortgage loans. Even trying out for Short Stay Serviced Apartments can be a temporary solution for your home needs, until you accumulate much money or get least interest rate from banks.