As I spoke a little the other day in the midst of the mortgage rate meltdown, many of us suspected that this was Wall Street overreacting to the Fed’s comments. Now, before I say I told you so, we have to analyze what Ben Bernanke said last week. It was clear and there were two parts to the story.
The first, Mr. Bernanke stated how the economy was heading in the right direction, things were getting better and it some point in the future the Fed would begin to start “tapering” its bond buying program that it has done for a few years now.
It would appear, the children running Wall Street only heard one thing….”There is Cake and Ice Cream in the break room!!” What they missed was, “You can’t have any until you clean your room.” Now, isn’t that much clearer to put it this way??
The Fed Chairman then followed his positive outlook comments by saying he was not altering its primary stimulus program, its stated intention to hold short-term interest rates near zero at least as long as unemployment remains above 6.5 percent and inflation stays under control. This would be the cleaning the room part.
Mr. Bernanke said that the Fed intended to reduce the volume of its monthly bond buying later this year. The Feds are currently buying $85 billion a month in Treasury securities and mortgage-backed securities to keep rates as low as possible. What caught investors ear was “Later this year” he would start cutting his treasury buying program…this was sooner than originally planned. Thus causing a panic in Wall Street and around the world where mortgage rates went up and the stock market tumbled. Very rare to have both of these markets take a dive as they did. The Feds are now doing damage control and trying to put out a clear statement, which is working to some degree.
Now, back to the part of where “I told you so”, today’s headlines in several of the Mortgage News updates, “Mortgage Rates Fall at Fastest Pace in June”. We are seeing a some improvement! I don’t thing we will get back to the lows of earlier in the year, but we should see this calm down a bit and settle in to the low 4’s. This is my opinion and anything can happen with the economy. Mr. Bernanke is a few pay-grades above me and he did not see this coming!!
Bottom line: If you are looking to buy a home or possibly refinance, the current rates are still at their lowest they have been since the 1960’s!!! To give you an idea of what this may cost you if you were to borrower $100,000 at today’s rate of 4.50%, it would be $507 per month compared to $450 at 3.5% that we were quoting in April. This is only an increase of $57 per month. This is based on a 30 year fixed rate with 0 points.
Is it the right time to buy? Of course, if you are looking for a new home, it has never been a better time. Ok, perhaps last month would have been better, but this still pretty darn good!!!
Do you have questions about buying a home? Do you have questions about what is the right program? This is what I am here for, to help guide you through the process, to make it easy, affordable and most of all, get you and your family in to the home of your dreams.
Email me anytime with any questions you may have about the home buying process.Bill Nickerson NMLS #4194 Merrimack Mortgage Company179 Great Road Acton MA 01720 Bill’s Email