Higher Interest Rates mean more inventory

September 25, 2013

Current interest rates today are

4.50% – 30 year fixed conforming

4.25% – 30 year fixed FHA

3.50% – 15 year fixed

4.125%- 30 year jumbo

The Feds say they won’t raise the target interest rate (rate at which the government loans money to the banks for mortgages) until unemployment reaches 6.5%. That’s not going to happen any time in the near future, we’re currently in the 7.3% range and the best pundits say the journey to a lower rate is at least a year out. So you ask yourself, “why are interest rates on the rise even though the target rate hasn’t changed?” It’s certainly not to slow our market!! You see people investing in mortgage backed bonds worry that higher interest rates in the future will affect the value of bonds that are paying at today’s lower rates. Bottom line is this – if the demand for bonds is less, then investors have to be paid more, so they continue to invest in bonds, it’s that simple.

With the slight rise in interest rates lately it’s made more buyers back away from purchasing, which is helping our inventory problems, hence we have more homes on the market to choose from now. So if you’re considering a move it’s a good time to check out the homes available.

You can run a quick Placer County Real Estate Search >>

[This opinion is based in part on the following story: will interest rates rise this year>>]

About Marsha Dashiell

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