Recently the Federal Reserve announced that it’s continuing to buy mortgage backed securities and treasury bonds. This is great news as this helps keep the rising interest rates from spiking. In fact Freddie Mac reports that the day after the Feds announcement rates dropped from 4.57% to 4.5%. The question though is how long will the Fed continue to do this and how long will it continue to be effective. According to an article posted on CNN, the fear is that should the economy gain more momentum that the Fed might reduce its purchases causing rates to move higher. CNN.com went on to write “Nothaft expects rates to hit about 5% by mid 2014. That’s an increase of less than $24 a month for every $100,000 borrowed–enough to weed out borrowers who are struggling to afford homes but not enough to impact overall demand.”
So what does all this mean. In our opinion, it means that we’re headed in the right direction but it’s still looking like a long road ahead before we find ourselves in the type of market that many current homeowners wish we were in. Rates are going to rise but many experts don’t think that it will stop the housing recovery and neither do we.