Article Is it a good time to buy? The answer is YES!
Is it a good time to buy? The answer is YES! I wanted to share some information that I recently came across from the publication Real Estate Insights. The following article was written by Lawrence Yun, NAR Chief Economist, and I think you will find it interesting! If you have any questions about the home buying journey, please don’t hesitate to give me a call at (612)309-4749 and have a very Happy Halloween!
How low can we go? We saw another historic low in the 30-year fixed-rate mortgage as the average rate touched 4.3 percent recently. The low rates are certainly welcome in this current post homebuyer tax credit environment to entice more buyers into the market.
Mortgage rates are exceptionally low right now for a couple of reasons. One is low inflation. Another reason: the Federal Reserve recently announced it may again start purchasing long-term bonds – which may include mortgage backed securities (MBSs). Even if MBSs are not included in the Fed’s repurchase program and it instead focuses only on government bonds, the bottom line impact will be roughly the same: such action will lower rates for any long-term borrowing. Because the bond market nearly always prices-in new information quickly, there may not be any downward movement on rates when the Fed actually does purchase bonds at later date. That is, from a practical point of view, the rate may have already reached the bottom. It is possible for rates to still go lower from this point onward, but more likely than not the rates will go higher. The path and the pace of change will be strongly influenced by changes in consumer prices.
With so high an unemployment rate (in September it was 9.6 percent), there is not likely to be any wage and inflationary pressure, some say. Hence we can expect a continuing low interest-rate environment for quite some time. If anything, we should focus heavily on avoiding deflation – a condition of generally declining prices.