As our country seeks financial progression, higher interest rates are inevitable. In case you weren’t aware, we’re already experiencing some drastic increases. According to mortgage company, Freddie Mac, the fixed average mortgage rate is now 5.21 percent… after being 5.08 percent last week! So if you’re looking into buying a place, it might make sense to do so sooner rather than later, unless you can wait a whole lot later.
Also, this is the last month for the first time home buyers’ government tax credit. While the increased mortgage rates will likely have an impact on home purchasing, we won’t start seeing differences until after this month. Those statistics are going to look extreme as well, and I’m sure lots of different political writers are going to use them in order to support their claims against government policies. But keep in mind there have recently (last few months) been substantial increases in home buying, so just because there might be a massive difference between home sales this month and next, don’t fall into a state of panic.
This is mostly true for the Washington DC metro area; I know places like Florida have not experienced this same surge of home buying. So keep that in mind if you’re looking down there. Sure, you’re going to hurt a little on the mortgage rate hikes, but so is everyone else in the country. At least in places like Florida you’re truly in a buyer’s market and are thus capable of playing with different options.
A good buddy of mine has been looking into purchasing his first home in Orlando these last few months. The house is for him and his fiancée. Apparently he’s seen multiple places, all around the city, most of which have been on the market for many months. Two months ago he made an offer on a five bedroom, 3.5 bath home that’s in one of the top school districts in the state, in a gated community, on a golf course, and with a screened in swimming pool and hot tub. The home was listed for $200,000! He made an offer of $175,000. The appalled seller explained that the price was non-negotiable, after having been forced to drop the price three times already. My friend knew the market, and most importantly knew that nobody else was even looking at this guy’s house, so decided to allow the seller to sweat for a few weeks. After calling his bluff and waiting a month, the seller called my friend with a counter-offer of $189,000. My friend considered the offer, and just countered it a couple days ago with $182,000. Regardless of which he ends up paying, he’s getting a hell of a deal (assuming when he decides to sell he won’t have to go through the same hoops as this seller).
But back to my point… these rises in interest rates will undoubtedly cause a financial burden on our country, and the hikes are necessary in order to get the nation’s economy closer to recovery. So instead of moping about the rates, plan for them and see if you can’t get out there and find something close to an arbitrage opportunity.
Some other hiked interest rates:
Credit card interest rates: up to 14.26%
Car loan interest rates: 4.72% (was 3.26% in December)