Interest Rates Are Changing

The recent word for the Federal Reserve (12/17/09) stated that short term interest rates will continue to remain low for “an extended period”.

This is interpreted by many that this means months. Well this sounds good but the reality is interest rates have been creeping up. As recently as the week of November 16th-20th interest rates were as low 4.6% for conventional, 30 year fixed rate loans.

As of this week it is hard to find a loan rate under 5%, most rates are closer to 5.25%. This is a minimum of a half point jump in a month. It doesn’t seem like much but a half point is a half point! On $150,000 loan that equals $45.87 a month, $550.44 a year and over the life of the loan the additional cost is over $16,500

So my point is if your out there waiting for home prices to drop just that little bit more because you want to buy at the bottom the rate you might get on your loan my cost you more in the long run. My feeling is from what I see in this local market is we have bottomed and home prices have stabilized. There is just to much inventory for prices to start to rise but I believe the price depreciation we have been seeing is coming to an end.

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