The effects of politicking in Washington led to some historic events for our country. Unfortunately, our most recent events have all been rather negative, to say the least. So, we are once again hearing that mortgage interest rates are at all-time, historic lows. I would not want to give our Washington elites too much credit for being the reason for these low rates. But the truth of the matter, is that due to our debt issues, our financial system must continue to make money as affordable as possible to those borrowing. This will help improve the velocity of money and hopefully spark more interest in Real Estate purchases.
Why are rates so low, and how long will it last? If we take a look at the 10-year bond, we can see that it is tremendously low. This particular indicator represents a beacon, so-to-speak, for how banks will adjust interest rates, particularly the 30-year fixed loan product. Things might change pretty soon, however. So, I am putting out the warning to everyone out there seeking to buy a new home or refinance – DO IT NOW!
Inflation is a general increase of prices and a decrease in the purchasing value of money. Our politicking led us to this crisis, and the only choice is to have Ben’s Print Factory (Federal Reserve) print more money. Lots of it!
Pumping more money into the system decreases its value. More than ever, our dollar will begin to fare poorly against other currencies. What does this mean for mortgages?
Very simply, we are going to have to pay higher interest rates for borrowed money in the near future. This means that we go from the perfect storm in Real Estate (low prices/low interest rates), to the difficult, downward spiral of our economy. As we know, it’s tough for the younger crowd to get into real estate after witnessing the massacre of the last five years. But the reality is, home ownership is a positive thing.