Buying a home in 2014 | The Cascade Team Real Estate | James Hall

Posted by on Friday, January 3rd, 2014 at 1:12pm

Buying real estate early in 2014 to capture low interest rates may be good advice. Read the below article by the Wall Street Journal to see why.  

  Experts posit that an important trend could continue in 2014 due to the inversely proportional relationship between the average of mortgage interest rates and new-home sales. Simply put, as interest rates go up, demand from would-be homeowners drops, and if rates change significantly, then the 2014 housing market will feel the effects.

 Making sense of the story:

• During 2013, increases in mortgage rates corresponded with declines in home buying, and in light of shifts in the Federal Reserve’s monetary stimulus effort, the trend is expected to continue.

 • When the Fed first announced it would consider scaling back its bond-buying program, mortgage interest rates spiked in May. As a result, the seasonally adjusted annual rate of new home sales dropped by 4 percent from the prior month.

• In contrast, mortgage rates dropped by three-tenths of a percentage point during October just as new home sales surged 18 percent.

• In mid-December, the Fed announced that it will begin tapering its asset purchase program, but the Fed is only reducing its monthly buys of mortgage securities and Treasuries by just $10 billion.

 • If mortgage interest rates increase a little, some analysts have stressed that further rate increases will see the recovery slow rather than reverse.

• The interest rate on U.S. Treasury notes is also increasing, which could signal higher interest rates ahead because it is used as a reference point for the cost of borrowed money for U.S. consumers and businesses.

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