Wednesday, March 20, 2013
Wednesday, March 13, 2013
Perspectives on Real Estate
Wednesday, March 6, 2013
Its on the Rise
As a busy mom I try to find time to do some fun activities with my kids. My mom moved here about 2 years ago and she has a pool where she lives. So of course we try to take the kids swimming. Its fun, and wears them out for later! :)
Do you remember when you were a kid going swimming and getting the life preserver and trying your best to hold it under the water? Didn't work so well. They are designed to float. This thought brings me to my subject for today. Rising Rates.
Interest rates are rising to, and the Fed alone cannot hold them down forever.
Are you prepared to take action before it's too late?
1) The Winds of Change: The actions for the Fed are both very real, yet artificial in nature. They work, but as in nature, physics and economics, the laws, fundamentals, and truths always rise to the surface in the end. In fact, we've recently seen that the consensus of the market is far more influential than the Fed holding its finger in the dyke. When the majority of the market participants begin to act en-masse, there is little if anything effective enough to counteract the trend.
2) The Trouble with Targets: Lately, the Fed had taken to announcing their benchmarks for letting the preserver go, whether it's inflation within the ideal range, or the unemployment rate at 6.5% everyone now knows where the bulls eye lies. Smart investors operate ahead of the curve and will exit the scene before the tidal wave hits. They know it's safer to be alone at sea than with the crowd on shore.
3) The Factors: There are many things that can contribute to rising rates from positive economic news here and abroad to whispers or hints of policy change coming from the Federal Reserve Board of Governors itself. The collective sentiment and actions of the mortgage backed securities investors be they hedge or pension funds, institutions, sovereign nations or any of the many other groups at play are the ultimate arbiter of what mortgage rates will do and those forces acting in unison making the market regardless of what the the Fed might like.
4) What can we do? As individuals, we can't change the market but we can take advantage of it. How so? We can lock in a rate before it changes and we can lock it in for as long as a loan is structured to last. Whether it's a hybrid ARM loan for 3, 5 , or 7 years or a fixed rate for 10, 15, or 30 years, the choice is ours and there's great certainty that comes with that. A fixed monthly mortgage payment for as long as we foresee using that loan is a great way to create permanence in an otherwise uncontrollable sea of change.
Rising rates are upon us now and while it's rarely a straight line up, there's not much merit in gambling at this point in the hopes of getting something better later. As well, it's not just rates but home prices that are on the rise again. The compounding of higher rates and prices can make what's affordable today become out of reach tomorrow.
Do you remember when you were a kid going swimming and getting the life preserver and trying your best to hold it under the water? Didn't work so well. They are designed to float. This thought brings me to my subject for today. Rising Rates.
Interest rates are rising to, and the Fed alone cannot hold them down forever.
Are you prepared to take action before it's too late?
1) The Winds of Change: The actions for the Fed are both very real, yet artificial in nature. They work, but as in nature, physics and economics, the laws, fundamentals, and truths always rise to the surface in the end. In fact, we've recently seen that the consensus of the market is far more influential than the Fed holding its finger in the dyke. When the majority of the market participants begin to act en-masse, there is little if anything effective enough to counteract the trend.
2) The Trouble with Targets: Lately, the Fed had taken to announcing their benchmarks for letting the preserver go, whether it's inflation within the ideal range, or the unemployment rate at 6.5% everyone now knows where the bulls eye lies. Smart investors operate ahead of the curve and will exit the scene before the tidal wave hits. They know it's safer to be alone at sea than with the crowd on shore.
3) The Factors: There are many things that can contribute to rising rates from positive economic news here and abroad to whispers or hints of policy change coming from the Federal Reserve Board of Governors itself. The collective sentiment and actions of the mortgage backed securities investors be they hedge or pension funds, institutions, sovereign nations or any of the many other groups at play are the ultimate arbiter of what mortgage rates will do and those forces acting in unison making the market regardless of what the the Fed might like.
4) What can we do? As individuals, we can't change the market but we can take advantage of it. How so? We can lock in a rate before it changes and we can lock it in for as long as a loan is structured to last. Whether it's a hybrid ARM loan for 3, 5 , or 7 years or a fixed rate for 10, 15, or 30 years, the choice is ours and there's great certainty that comes with that. A fixed monthly mortgage payment for as long as we foresee using that loan is a great way to create permanence in an otherwise uncontrollable sea of change.
Rising rates are upon us now and while it's rarely a straight line up, there's not much merit in gambling at this point in the hopes of getting something better later. As well, it's not just rates but home prices that are on the rise again. The compounding of higher rates and prices can make what's affordable today become out of reach tomorrow.
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