Generally speaking, when interest rates go up, that’s bad for my real estate business. That’s bad for any real estate business. That’s bad for anyone who ends up having to pay more in finance charges. So I’m hoping, for my sake, the sake of my fellow Realtors, and for your sake that rates do not go up.
But hopes and wishes aside, mortgage interest rates will probably increase soon. Why? Because as of today the Federal Reserve will no longer buy mortgage backed securities at artificially inflated prices.
A $1.25 Trillion program that lasted a little over a year has come to an end. At this very moment the Fed is not buying any mortgage backed securities.
We can question the wisdom of our government doing this in the first place. Especially with money that did not really exist. But the fact that the Federal Reserve has purchased over 80% of all federally backed mortgage loans in the past year is the reason you had a shot at getting a sub 5% mortgage. Did you take your shot?
Where do we go from here? Rates will probably rise. All the experts agree on that.
And it will probably occur without much warning. Aside from articles like this one. Rates could also take huge day-to-day swings. You see, now private investors must move in and set the “real” value of these mortgage backed securities. And if private investors do not see as much value in paying the high prices that the Fed paid, rates will have no where to go but up.
I have always advocated partnering with a good team for your home purchases. That team should consist of a great mortgage loan officer, attorney, home inspector, possible various contractors, maybe a builder, and of course your Realtor.
Now this is more important than ever. Find people you can trust to help you and to work hard to deliver the best possible home buying or selling experience.
I’ve spent years putting together a fantastic team of professionals that will take a personal interest in your success. Want to meet them? Give me a call.
Interesting article. With the conditions that create inflation currently happening, I wondered why the rates remained unaffected. I would think that if your on the bubble whether to buy now or not, this information should help you make that decision.
Rates remained unaffected because the Federal Reserve spent $1.25 Trillion to prop up the secondary markets. That came to a sudden end March 31. That plus the presence of the inflation creating conditions you mention point to higher rates. You are absolutely right that this fact should be seriously considered if you need to buy a home anytime soon.