Interest rates are so important in real estate that we have to discuss the Federal Reserve’s Qualitative Easing program with you. When Janet Yellen took over for Ben Bernanke, she indicated that she would stay the course with this program that has kept mortgage interest rates extremely low. As we turned the corner to 2014, she began cutting the Fed’s program which buys Mortgage Backed Securities from 85bn a month to 75bn, then 65bn and recently 55bn.
So much for prior comments. Now Yellen says that QE will end around the end of 2014 and that the Federal Funds rate will increase roughly 6 months after that. The Era of cheap mortgages will be over at the end of the year.
What does this mean for you? First, if you’re a buyer, homes will be less affordable as your payment will be higher. I would strongly recommend not waiting to purchase. If you’re a seller, this effects you negatively as well. As you go through the year, all the people interested in buying your home will have higher payments. This can only mean less people to buy your home.
The only solution to this is to buy or sell over the summer of 2014 before many of these changes take effect. Please contact me @ 702-379-3401 for further information as this is indeed a complex issue.