For the second meeting in a row, the Federal Reserve left interest rates alone. It’s good news for those with adjustable rate mortgages and those thinking of buying and refinancing. They cited a cooling national housing market and declining gas prices for taking the pressure off deflation.
This should be a good trend. We’ve now seen 2 pauses in Prime rate hikes. But we need to be careful in how we interpret this impact on rates. The Prime rate, what the Fed determines, really only has an impact on short term credit (credit cards and bank loans) and home equity lines. Most ARM’s are tied to the LIBOR, MTA or a few other indicators. The effect of the Prime on our economy can have an impact on these other indices, but there is no guarantee.
For long term rates we need to look at mortgage backed securities, and the appetite investors have for those. While we are seeing another nice little rate decrease for 30 year fixed loans, Europe and Asia are slowly increasing their “prime” rates. If this continues we could see foreign investment in our mortgage backed securities reduced as they invest in their own economies. This would drive fixed mortgage rates up.
But for now, things look pretty bright for fixed, ARM’s and HELOC’s.
La Jolla, San Diego, Real Estate, Homes, Condos,
Normal Market –
In a normal market, there is fairly a large number of homes available and an average number of buyers. This market does not necessarily favor the buyer or the seller. A seller may not have as many offers on their home, but he or she may not be desperate to sell either. Again, it is the buyer’s responsibility to be prepared. During a normal market, the chances to negotiate are higher than in a hot market. As a buyer, you can expect to make offers at lower than the asking price and negotiate a price at least somewhat less than what the sellers are asking. http://www.ExchangeCA.com