The Federal Reserve meets every month and, inevitably, speculation over the possibility of an interest rate rise is a popular sport among commentators and journalists.
This month's meeting, held yesterday, was touted as being extremely significant, however, as experts had been talking for some time about an interest rate rise happening in the September Fed get together.
As you may already be aware, the widely predicted rise simply didn't happen. The statement issued by the Fed highlighted ongoing concerns of a weakening global economic outlook and the distinct possibility of it exerting a downward pressure on the US rate of inflation.
The comments about inflation were extremely significant for mortgage rates, which have fell since the announcement. This is because inflation levels are a key element in the attractiveness of investing in mortgage backed securities (MBS), the basic yardstick by which rates are set. Because the Fed was suggesting the possibility of lower US inflation, investors were suddenly more willing to buy MBS at lower rates.
Unsurprisingly, the real estate industry held its collective breath yesterday morning and early afternoon, eagerly waiting for the outcome of the meeting. Yet again, it was very good news for home buyers and sellers and, given that everything else is so rosy in the realty garden right now, we're now set fair for a really lively fall selling season.
Of course it's inevitable that mortgage rates will rise at some point. However, we have now been expecting this for the thick end of two years and rates still remain near to historic lows, fuelling the entire real estate market and promoting incredibly high levels of buyer sentiment.
The most consistent element in the refusal of rates to climb significantly is unquestionably the influence of global factors, either in terms of conflicts, severe financial crises in countries such as Greece, the European immigration crisis or the general uncertainties in the biggest markets, such as the recent stock market fluctuations due to worries over the state of the Chinese economy. Indeed, it is very likely that the recent roller coaster ride that markets have been subject to will have weighed on the Fed's September meeting decision.
So, even though our own economy is doing much better and buyers have more confidence in seeking a home of their own, financial influences elsewhere are keeping rates lower than they probably would otherwise be.
If you have been delaying the sale of your home, this somewhat unexpected turn of good fortune for mortgage rates is going to prolong the sense of urgency among buyers to lock in low rates by buying as soon as they can. We therefore are predicting a very lively market this fall and would be happy to help you take full advantage of it too, especially as inventory of available homes in the Albuquerque area continues its struggle to keep up with growing demand.
Call us today for an informal discussion.