Referencing the article published this week on Realtor.com:
For those who are familiar with basic economics, it should be no surprise that mortgage rates have begun what is likely to be a very long ascent to historical highs. Over the next three to five years, I fully expect mortgage rates to rise well above 10%, possibly even revisit the highs of the 1970s and early 1980s (my father’s first mortgage on a home was 18% to give you an idea).
So why is this happening?
Generally speaking, markets such as the stock & bond market (and in some respects, the Real Estate Market), price assets and set rates based on forward projections, usually extending out 6 to 12 months. In this case, given the Federal Reserve has indicated that they will cease buying bonds (the result of this activity has been low interest rates), it means the beginning of an “exit strategy” from their previous direction of keeping interest rates low and asset prices high (some would argue artificially inflated).
So how does this effect me?
If you are in the market for a home and will need financing, jump on the opportunity while you have it to lock in what is still a historically low rate (we are WAY below the 20,30,40 and 50 year averages for interest rates still) and get yourself into a home.
On the other hand, if you are an all cash buyer and financing is not needed or wanted, you might want to consider waiting on your home purchase. Historically, when interest rates rise, asset values fall. Keep in mind, however, that there is a very strong case for a terrible wave of inflation to begin in the United States. Eventually, the printing of trillions of dollars WILL have a considerable effect on your purchasing power. If you follow Peter Schiff, waiting too long could potentially prove as onerous as having a 10-20% mortgage. I highly recommend following Peter by the way; he is a very smart man who was one of several people I either know, or know of, that saw the 2008 bust coming well in advance.
Coming Next Article:
I will be publishing an article very soon regarding the malpractice of the Federal Reserve and the Federal Government with respect to how they have seriously abused the good faith and credit of the United States with both our recent & current Monetary Policy & Fiscal Policy. I will be sharing select videos of Peter (mentioned above) and some of our own CNN-style Congressional discourse that will demonstrate just how badly we need a change in leadership at all levels of the Federal Government.