NEWS
I’m hearing from my mortgage broker friends that there is a very good possibility that rates will increase in March 2010.
WHY IT IS HAPPENING?
With the Fed buying fewer Mortgage Bonds and wrapping the program up entirely at the end of March, any improvement in rates may be modest at best.
In fact, last week the Fed purchased just $9.3B in Mortgage Backed Securities. This is down sharply from their recent purchases averaging around $15B, and down from highs of $25 to $30B over the Summer. Their total purchases are now $1.11 Trillion out of the $1.25T allotted for the program.
This leaves $140B remaining in purchases over the next 12 weeks before the program ends.
WHAT IT MEANS FOR YOU
So, if we have you on a track to get in to a home this year, remember that increased interest rates are more costly than increases in home prices.
If interest rates go from 5% to 6%, that is an increase of $63 per month on a $100,000 home.
Please contact me if you’d like more information. If you have been working on your credit score, or otherwise been getting things lined up for a purchase this year, we may want to take this development in to account and make a plan for you.
