by Mike Colpitts
Editor
Like a batter waiting to hit at home plate, many people are waiting and worrying about when it’s the right time to buy real estate again. Batter up!!! It’s time to hit.
The mortgage melt down will last well into the next couple of years, but it’s apparent that interest rates are at the lowest rate they’ll be for quite some time. If you need a mortgage to buy, you might consider acting now. Over the last two weeks rates have been inching up for a typical 30-year fixed rate loan to 5.98% up from 5.82%, according to Bankrate.com.
Federal Reserve Chairman Ben Bernanke has made it clear that the Fed isn’t planning on cutting rates at its meeting later this month. The Fed is hoping that its series of interest rate cuts coupled with the White House monetary stimulus package and opening the Fed’s window to banks is enough to re-ignite the nation’s slowing economy.
In remarks made during an international monetary conference in Barcelona, Spain Bernanke said the Fed’s rate reductions, which started in September, along with the government’s $168 billion stimulus package, including rebates in the form of checks, should bring about “somewhat better economic conditions” in the second half of this year.
The Fed dropped its key interest rate to 2 percent in April, nearly a four-year low. It’s clear the Fed is done tinkering with interest rates at least for now in hopes that the nation’s economy is getting back on track.
As a result, consumers considering the purchase of a new home or other property have to carefully weigh the chances of paying more for a mortgage against how much more prices may slip in the market where they are considering a purchase. No one knows for sure which way interest rates will go, of course, but the chances they are going down anymore seems at best remote.
The Fed is delicately trying to balance the higher cost of gasoline and commodities, which has fueled inflation at the grocery store and it seems every where else you buy anything.
Historically, at least when the Fed becomes more concerned about inflation the board typically votes to raise the key lending rates it charges banks to do business, which in turn leads to higher borrowing costs for consumers. Mortgage rates it appears may be increasing, slowly but surely over the next two quarters.
The Fed’s juggling act is particularly edgy this time considering the nation is under going the worst epidemic of foreclosures in history. Many of the forecast 5.6-million homeowners to be foreclosed through 2011 are owner occupants, but high percentages are also investors, who found the mortgages too much to handle financially. As a result, the nation’s markets have some of the best opportunities in years for investing in real estate.