This Jan. we thought it would be a good time to start looking for houses, since the rates came down… but being slow and you know, having a child – we just recently got out and actually looked at houses.
By now the rates are over 6% for a standard 30yr mortgage. We have perfect credit and decent everything else… but the lenders are just not passing along the reduced rates.
Furthermore – the costs of houses are unstable… in some ways that’s good for the buyer, as we could haggle more effectively… but the down side of that is – if we buy a house, in 2 months, the house may well be worth less than what we paid for it. That’s the whole problem with most of the junk loans and though ours wouldn’t be as serious as the ones all over the news, it’s still an issue.
– references –
You’d think that lower interest rates would help out struggling borrowers. Yet while the Federal Reserve has moved repeatedly to cut rates, the positive effects of those cuts aren’t getting to those who need them most.
Unfortunately for many borrowers, however, the Fed’s actions aren’t
having the effect they might have hoped for. After dropping
substantially in January, mortgage rates have risen back toward the
range they traded in before the Fed started making cuts.
But just because rates are falling, that doesn’t mean you’ll be able to
take advantage of them. Because of tighter credit terms, you won’t
necessarily be able to get a loan. Falling home prices mean that you
may not have equity left in your home to borrow against. It’s a bad
situation for everyday borrowers and consumers.
Many economists expect Fed policy makers to cut the central bank’s key
interest rate by 1 percentage point, but they worry even this reduction
won’t halt the erosion in confidence undermining the economy. Lower
interest rates, which aim to boost the economy by enticing consumers
and businesses to borrow and spend, provide little help if lenders
aren’t loaning money out of fear they won’t be repaid.
The Fed has cut its benchmark rate by 2.25 points since September, but
the economy has continued to deteriorate. Most economists believe the
United States has entered a recession, and many increasingly expect it
to be longer and deeper than the recessions of 2001 and the early
1990s, both of which lasted eight months.