Bad time to want to buy a house

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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.

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