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

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

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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.  

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  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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