Mortgage rates at a near 52 week low for the second time in 2014.
Then something happened that would shake up the mortgage world, if only just a tad. The Federal Reserve announced that they “may” reduce their $85 billion monthly stimulus in backing Mortgage-Backed Securities (MBS). This caused a very short-lived panic as some investors began selling off their own securities, thus compelling rates to jump into the 4’s.
Some analysts were predicting that, should the Federal Reserve actually follow through with their plan, that rates would begin to rise into the 5 percent range (and possibly higher) by 2014.
Flash forward, and the Federal Reserve has indeed begun cutting back on their stimulus, usually in $10 billion increments. As of August 2014, the monthly stimulus is down to $25 billion. Good news in that it equals over half a trillion dollars (That’s TRILLION with a “T”) in savings off the federal budget over the course of one year alone.
More good news: The reduction in MBS stimulus spending has not further affected mortgage rates. In fact, rates have remained below 4 and a half percent pretty much all year. As of Friday, August 15th, rates closed at 4.09%, which is only .01% higher than the 52 week low.
What this means to home buyers.
Home buyers should seriously consider “striking while the iron’s hot.” The Santa Clarita Valley is seeing an increase in inventory, and current buyers are enjoying more selection and, in some cases, terms than they did this time last year.
If you’re still thinking of holding off on a home purchase, consider this: Had you purchased a single family home at the beginning of this year, it would have increased (on average) by $48,000 in equity.
So what are you waiting for? Contact the Lichen-Hooper Team to find out how we can help you purchase your dream home.