Home buyers should take this opportunity to leverage this incredible purchasing power.
It seems to have defied all expectations by major financial analysts who predicted that rates could jump as high as the mid 5% range by 2014. Amazing to see how those predictions turned out, as interest rates fell below 4% this week for the second time in a month.
So how did the analysts get it so wrong? If you remember, in early 2013 rates were down nearly to 3 and a half percent before taking a jump back as high as the mid 4’s by summer. This was a result on a selloff of mortgage-backed securities based on information from the Federal Reserve that they would consider reducing the monthly stimulus that had guaranteed mortgage stocks since November of 2008. The monthly stimulus added up to $85 billion. This practice is known as Quantitative Easing (QE).
However, the Fed backed down, announcing during the summer of 2013 that they would make no immediate moves to reduce QE, and investors breathed a sigh of relief; although not before mortgage rates settled in the mid 4’s, holding that position for nearly another year. Investors then predicted that, should the Federal Reserve decide to reinstate their policy of reducing QE, rates could jump as high as 5 percent or greater.
Interestingly enough, at the beginning of 2014, the Fed reversed their decision, and began backing off their monthly stimulus commitment, and at the end of this summer, announced they would completely stop the practice. So far, this has done nothing to interest rates or the mortgage market. In fact, rates have remained steady, and dropped to below 4% toward the end of last month. They did bounce slightly back into the very low 4% range, then this week we’ve seen them drop by nearly .10%.
Buyers, what are you waiting for?
Those looking to purchase a home should not overlook the opportunities during this time of year. There are definitely homes for sale in the Santa Clarita Valley, and with fewer buyers out there, you have a better chance of finding your dream home against less competition. Many sellers, in hopes of being in escrow before the end of the year, may be more amenable to negotiation of terms and even pricing.
Either way, we would advise you that if you’re on the fence, now is a good time to examine your options and see if you qualify for a loan. We may get you into escrow (And maybe even into your new home) before the end of the year.
Contact the Lichen-Hooper Real Estate Team today to lock in your rate!