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Frank Agahi Real Estate PodcastLearn all the tips, tricks and more for buyers and sellers in the Irvine Area Real Estate Market Author: Frank Agahi
If you are looking to buy or sell a home, get all the information and the latest updates, tips, and tricks from Frank Agahi- your professional Irvine Real Estate Agent. Language: en-us Genres: News Contact email: Get it Feed URL: Get it iTunes ID: Get it |
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Are We Heading for a Crash?
Friday, 30 September, 2016
Mortgage rates are always closely tied to the 10-year bond rate. Buying a home? Click here to perform a full home search Selling a home? Click here for a FREE Home Price Evaluation Call me at 949-552-7653 for a FREE home buying or selling consultation Are interest rates going up? First, think about what causes interest rates to go up. As I've always said, real estate is all about timing. Those who make money in real estate are the ones who have timed it well. Other factors like location and condition matter, but timing is what people make or lose money on. There has been a lot of talk lately about the Federal Reserve potentially raising rates soon. Some people are under the impression that mortgage rates will go up if the Federal Reserve raises rates. However, the last time the Federal Reserve raised rates, mortgage rates actually dropped even lower. Mortgage rates always closely fluctuate with the bond market. Looking at the bond market will probably give you a better idea of what is going on with interest rates. Bonds are at one of their highest historical prices, and the higher the bond prices, the lower the yield. " Mortgage rates are always closely tied to the 1-year bond rate." The lower the yield, the lower mortgage rates will be for you and I. You can look at 10-year bonds and their interest rate to determine mortgage rates, usually, because most lenders base their rates on the 10-year bond. Today's price for a 30-year bond is one of the highest it has ever been. As a result, it has a lower yield than it has in the last 30 years. In fact, it is the first time in 30 years that the 30-year bond yield is lower than the rate of inflation. This is because other countries with negative interest rates are rushing their money to the United States to take advantage of the positive interest rate, even as low as it is. Many on Wall Street believe that the next bubble is a bond bubble. If this bond bubble really bursts, bond prices will go down, yields will go up, and as a result, our interest rates will go up. Additionally, interest rates have fueled home prices to go higher. Any changes in the interest rate will have the same effect, but in reverse. Affordability will drop and so will prices. So when asking if interest rates will go up or not, look to the bond market. The bond market's rates are as high as they've been in 30 years, and most people think they need a correction. I don't think anybody can say whether it will be a correction or a bubble. If you have any more questions about mortgage rates and the factors that affect them, give me a call or send me an email. I'd be happy to help you.
