Fed Interest Rate Decision Will Give Fall Home Selling Season A Real Boost
The Federal Reserve meets every month, leading to inevitable speculation by commentators over the possibility of an interest rate rise.
This month's meeting, held last Thursday, was extremely significant, however, as experts had been talking for many months about an interest rate rise announcement in September.
You may already know that the anticipated rise didn't happen. The Fed's post-meeting statement highlighted ongoing concerns of a weakening global economic outlook and the likelihood of it having a downward effect on the US rate of inflation.
Inflation is very significant for mortgage rates, which have fallen since last Thursday. Inflation levels are a key element in the appeal of investing in mortgage backed securities (MBS), the key measure by which rates are set. As the Fed pointed to the possibility of lower US inflation, investors were immediately more willing to buy MBS at lower rates of interest.
The hours leading up to the Fed announcement were nervous ones for the entire real estate industry and its stakeholders. Yet again, however, there was excellent news for home buyers and sellers and we're now all set for a very active fall selling season.
In all the excitement, we should not forget that that mortgage rates will inevitably rise at some point. That said, we have been expecting this to happen for most of the past couple of years and yet rates remain firmly rooted near to historic lows, stimulating the entire real estate market and exceptionally high levels of buyer sentiment.
The refusal of rates to climb significantly can largely be attributed to the influence of global factors - conflicts, severe financial crises in countries such as Greece, the European immigration crisis and the uncertainties in major markets, demonstrated by the recent worldwide stock market fluctuations due to worries over the state of the Chinese economy. Indeed, it's very likely that the recent wild ride that markets have been on will have significantly influenced the Fed's September meeting decision.
So, even though our own economy is performing better and buyers consequently have more confidence in seeking a home of their own, varied influences around the world are helping to keep rates lower than they might otherwise be.
If you have been delaying the sale of your home, you cannot ignore the fact that further good fortune for mortgage rates will continue to inform the sense of urgency felt by buyers to lock in low rates by purchasing as soon as they possibly can. We therefore are anticipating a very busy market this fall and would be delighted to help you take full advantage of it, especially as the inventory of available homes for sale in our area continues to struggle to keep up with growing demand!
Why not call us today for an informal discussion.