The Fed has indicated that they would like to be a buyer of Mortgage Bonds, which has resulted in attractive, lower rates right now. But as stated above, the trading environment is extremely volatile, and opportunities to capitalize on lower rates that make sense should be taken advantage of. There have been recent rumors of interest rates being brought down towards 4.5% by the Treasury. This irresponsible release included no definitive plan, no indication of who might qualify, or what the restrictions would be. Like many other recent legislative "solutions", the restrictions might be very tight, with income limits set very low, and as a result, helping very few people. Remember, it may make sense for you to act now, and take advantage of current historically low rates...with the possibility of refinancing should rates decline further.
In other news to note from last week, the Bank of England and the European Central Bank both cut their key benchmark interest rates in an effort to revive their sagging economies. The reduction in rates was expected as part of a global coordinated effort, and our Fed is widely expected to cut its benchmark rate during its meeting on December 16. While a cut by the Fed often causes home loan rates to rise - because a Fed rate cut can lead to inflation, which is the arch enemy of Bonds and home loan rates - the deflationary environment we are currently in may prevent home loan rates from worsening significantly after the Fed cut. This is going to bode well for all those apartment building loans tied to the LIBOR rates. Personally I'm Loving this.
Bonds and home loan rates tested their best levels of 2008 throughout last week, but could not improve beyond them. As a result, Bonds and home loan rates ended the week slightly worse than where they began... even in the midst of rumors of rates declining as mentioned above.
GAS PRICES SURE HIT A RECORD EARLIER THIS YEAR, BUT NOW THAT THEY HAVE IMPROVED! I have seen multiple stations here in Los Angeles with all 3 prices under $2.00. I did not think I would see these prices again in my lifetime. I thought for sure that once the consumer public had gotten used to $3.00 plus gas that it would never come down.
So what market forces are making me feel better today? Gas at a reasonable price & the loans on some apartment buildings some clients have are about to become cheaper and more affordable for their operating budgets. (and I manage some of those)
Those are very good things.
Think of all the handymen and service guys like plumbers who service apartments and homes all across America... Cheaper gas means they may afford better holiday gifts for their kids and wives this month!
Very good things.