Stronger Housing, Higher Rates
In the last week of May, Fed Chairman Ben Bernanke’s Capitol Hill comments
sent shockwaves through financial markets. The aftermath that ensued in Stock and
Bond markets was due to investor-wide fears that the Fed would taper its
“Quantitative Easing” program. QE is the Fed’s effort to stimulate the economy by buying Treasuries and Bonds. And in case you forgot, the Fed represents the nation’s policymakers who set the country’s interest rates and monitor its general economic health.
Tapering fears were confirmed at a mid-June Washington news conference,
when Bernanke stated that the central bank was indeed ready to slow QE. And
despite the average 30 year fixed rate increasing to just under 4 percent from
3.35 percent in early May, Bernanke said the rise was not “so dramatic” as
he suggested the housing market may be strong enough to withstand higher
This is good news regarding the nation’s economic health. Home prices in 20
metropolitan areas have increased 10.9 percent in the 12 months through
March, the biggest gain in seven years as residential real estate is also
bolstered by an influx of institutional buyers, limited supply and an improving
job market, according to Bloomberg and S&P/Case-Shiller index data released
Though home loan rates have risen in recent weeks, they remain attractive by
historical standards. Fence sitters locked in rates for fear they will go higher as
witnessed by mortgage applications rising in mid-June, after falling for three
Adding fuel to Stock and Bond market fluctuations are European and Asian
markets. May and June were relatively calm, but Japan’s Nikkei Index moved
into bear market territory in mid-June, causing markets in Europe and the U.S.
to take notice.
In short, summer 2013 should be a very busy time for home buyers and
realtors. Inventory is low and buyers are jumping on viable properties and
locking in home loan rates, which means secured closings in your pipeline.