2010 First QuarterWhat's the Outlook?A looming shift in Federal Reserve policy could send the 30-year fixed mortgage to 6% or higher sooner and faster than expected, slowing demand and pushing prices down.
For the past year the Federal Reserve’s voracious $1.25-trillion purchase program of mortgage-backed securities has pushed rates on a 30-year conforming fixed-rate mortgage to all time lows. Rates have remained at these low levels throughout 2009 because the fed has spread out their buying.
Well, all good things must come to an end….The Federal Reserve has signaled that it intends to wind down its purchase program by the end of the first quarter of 2010. Analyst Meredith Whitney recently dubbed the Fed’s “Great Exit” the biggest risk for banks and the markets over the next four months. And consumers.
When the Fed stops buying mortgage securities in March as planned and private investors don't step up, rates can and most likely will spike to 6% or higher very fast.
My Recommended PlaybookBuyers: Make your move now. Have you been on the sidelines waiting for prices to go lower before house shopping and bidding in earnest? Don't hold off much longer. Houses are now more affordable than at any time in the past two decades, according to the National Association of Home Builders -- good news for anyone looking to buy. You'll have plenty of homes to choose from as foreclosures continue to pile up and more homeowners list their houses in an improving market. If that wasn’t enough… Congress has recently extended the first-time homebuyer credit, and even expanded it to include those with higher incomes and current homeowners However, be sure to keep a close eye on mortgage rates. If they rise sharply as the Fed's mortgage buyback program draws to a close, act quickly to lock in a low fixed rate
Sellers: Postpone listing your home, if possible. Sellers next year will be unloading property at what's likely to be the very bottom. Ouch. Hold out for a few more years, so you'll compete against fewer foreclosures, increasing the chances your home will fetch a higher price. Delaying your sale isn't an option? Act fast before prices drop further.
Owners: Look into refinancing, and rein in spending on home improvements. You're a prime candidate for refinancing if you have an adjustable-rate mortgage and will be in your home for at least five years. There's no reason to wait; you won't get a better deal than you will now.
Give me a call or shoot me a PM for a free quote....I'd be honored to assist you, and truly appreciate your business! I can be reached anytime at 206.852.9964 or Toll Free 866.280.3899Thanks!
Erik
