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Monday, 01 July 2013 01:45

Low Interest Rate Historical

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    From 1971 to 2013, we are seeing the lowest mortage interest rate ever in history.  However as you may or may not low this low interest is not here forever and is artificially made by the Fed that continues to purchase USA bonds in order to stimulate the houseing market and the economy today.  in 2008, Fed starts to purchase lots of toxic mortagages to save the collapsing housing market and banks.  Have you thought about what if the Fed stops or decreases its buying of USA bonds?  It is why we say today's low interest rate is made artificially and will not stay forever.

    Just recently we saw the news regarding how the Fed is starting to consider tapering the stimulus program, and it sent the interest rate back to 4.25% for Hawaii on a 30 year fixed mortagage toward the end of June.  A quarter percentage jumps can affect your monthly payment for the mortgage if you were not able to lock in the morgage rate at a lower rate previously.  

     This historic low interest rate on mortgage enables many people who are currenly renting to get a loan to buy a place where their mortgage payment would be equal or even less than what they are paying for the rent today.  This creates competition for the already low inventory of housing on the market today.  Increasing demand and lowering supplies will create competition and bid up.

Bid up is a term used to describe where there are multiple offers over the listing asking price.  Please refer to the bid up article for more info.

Read 4979 times Last modified on Saturday, 13 July 2013 05:41
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