Oh Where Oh Where will interest rates go?

Seems to me the big talk on the town is what are the rates today and when are the 4% rates coming to town? The answer is I don’t know when the low rates may come or if they even will. The Stimulus Bill has been passed and many expect that to push rates to the all time low 4%. I am not saying that it could not happen but rates today were 5%. What we are waiting on is a 1% drop in rates. That is a big drop.

For rates to drop to this level several things have to occur. Not only does the FED have to buy Mortgage Backed Securities in Bulk but they would also have to deliver verbiage that would make the investor happy. Yes, I have seen the FED control monetary policy verbally. There is a lot of power in the statements the government makes and they have a large affect on the appetite of our investors.

The one thing that I would like to impress upon my buyers the most is that rates trade within a range. There is a high and a low end of this range. Frequently throughout the day or the weeks the rates will trend up and down inside this range until something significant moves the range. Of late the range has been the low to mid fives. These are awesome rates and one should be happy to have a mortgage in the fives. Briefly, I saw the range drop to 4.5-5% but that was very short -lived.

As a buyer you must be aware that the locked rate is attached to the collateral or in your case the property that you would like to purchase. While you are looking interest rates can change several times within a range or even have a range change. Please be in contact with your loan officer to make sure that you know this range and that you  are comfortable at the high end of the range. By doing this you are insuring against a rate moving causing the home you want to be pushed out of your price range. Plan for the worst of the range and your home buying experience will be pleasurable.

No one really knows where rates are headed as “noone” has a true grasp of what is going on right now. The best one can do for themselves is prepare. If you like the home and you are comfortable with the rate and the payment then the time is right for you. Trying to time the market is a guaranteed disappointment. There will always be something that could cause you to say “Iwish I had………”

Timing the market is buying when the time is right for you.


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February 2009
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