Mortgage and Real Estate Blog

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Is this the end of the low interest rates and declining home values?

Is this the end of the low interest rates and declining home values?

St Paul, MN: If you've been holding out for lower interest rates, and home prices continuing to drop, you may be missing out. There are two major areas to understand.

Interest Rates: The markets eventually have to settle down and return to traditional economic realities. Worldwide investors, especially those in the US Market are starting to demand a greater rate or return, or why bother investing at all. What does this mean? Simple, the current 10-year bond has been trading below 3.00%. There is no money to be made there, so why buy bonds?  If people don't buy bonds, lenders will have no money to lend. Mortgage interest rates simply have to increase. Combine that with the Fed not artificially propping up the market by buying bonds (that program is ending soon), the US growing budget deficit, Europe and China increasing interest rates, and look to see our low mortgage interest rates start to disappear. Bottom line: Act now. These low mortgage interest rates may be gone soon.

Home prices: This spring housing numbers are in, and while not super impressive, the numbers are UP. The average house price is up $5000, and are about equal with the average value we saw in the summer of 2003. What is really notable is that this is happening despite the fact there are no government program propping up the market, like last years $8000 first time home buyer credit, and the overall state of the economy. People are starting to take advantage of both interest rates and house prices, and as the activity increases, expect home prices to start a steady recovery.  Bottom line: Act now before home prices start climbing.

Comment balloon 1 commentJoseph Metzler • June 29 2011 10:35AM
Is this the end of the low interest rates and declining home values?
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