Mortgage Rates Increased By The Feds In A Surprise Move
So the Feds decided to raise Interest Rates yesterday way in advance of everyone’ expectations. We have been hearing that rates will rise all year and this is the beginning of what many people believe to be an upward trend. Any rate drops are temporary and should be used as opportunities to lock in. Consumers that are STILL holding off for lower rates will be greatly disappointed and likely pay more for their home loan. Rates were what I consider the bottom in April 2009. The most recent bottoms were higher which suggests and confirms an upward tick. Since the feds are supposed to ease on buying back Mortgage Backed Securities in April, I just don’t see how the artificial rate market can continue. Then again, I have seen many things that don’t make much sense. It appears that with the recent focus on national debt, the feds will start to ease up on giving handouts to all the banks. The national deficit has been going through the roof to save the economy.
Also, there is a bunch of mixed news in my opinion regarding foreclosures and defaults. I just read an article that less people are defaulting compared to last year but foreclosures are on the rise. The media is starting to turn around and post figures indicating that the housing market has hit the bottom. However, I don’t see the economy getting any better any time soon. I think most of the figures are skewed some way in a similar fashion that they were before this mess. In my opinion and from personal observation, unemployment will keep the economy down and cause a “flat bottom” recover.
On the bright side, I think this market has and will continue to create tremendous opportunities for those that take advantage and adapt to this market and Interest Rates will not have a huge impact on affordability. The bigger piece of the puzzle is home financing. Tighter standards and more red tape is what’s delaying transactions and keeping some people from qualifying. I don’t want to say that these changes don’t makes sense, however, I think in the amount of time all this has happened, it is an overkill. Guideline changes have swung like a pendulum from one extreme to the next. As of right now, we are still waiting for a sign of relief in regards to qualification guidelines.
Home are already extremely affordable and many investors are capitalizing on the opportunity. To my surprise, FHA made it easier for investors and anyone flipping properties by waiving the 90 flip rule. Prior, anyone who purchase a property had to wait 90 days to resell it to a new buyer. With the recent change, an investor can buy a house, fix it and resell it in a week or two for a profit to an FHA qualified buyer.
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Posted by Carlos Sagastume on February 25, 2010. Filed under HUD Homes.
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