Orlando Real Estate News

The News Observer recently reported that the Federal Reserve is keeping the Interest Rates low:

The Federal Reserve pledged Wednesday to hold rates at record lows to nurture the economic recovery and lower unemployment. But its decision drew a dissent from one member, signaling the Fed's challenge in deciding when to pull back stimulus money it pumped into the economy.

The Fed's statement sketched a mixed picture of the economy. Pointing to weakness, it noted that bank lending is contracting. And it dropped a reference in its previous statement to an improving housing market.

What does this mean for Orlando home buyers?   It means that you still have time to purchase a home at historic low interest rates.   But don't wait too long?   These rates won't stay low for much longer.   And if you want to take advantage of the Tax Credit you better get moving.   You must be under contract by April 30th to be eligible to take advantage of it!

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The Huffington Post recently reported:

The debate over the future of the program comes amid uncertainties about whether the budding recovery can be sustained once government supports are removed. At the December meeting, Fed policymakers decided not to make any changes to the program. At their September meeting, they opted to slow the pace of the purchases, wrapping them up by the end of March, rather than the end of 2009.

What does this mean to home buyers?   It means that the days of historically low interest rates are limited.

Read Also:  Rates Still at Record Lows Thanks to Fed

Right now we cannot say how long interest rates will remain historically low. This is dependent upon the US economy and how much longer it remains in recession. As soon as economy recovers and inflation returns, interest rates will to rise quite quickly.

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WASHINGTON - Jan. 15, 2010 - Buyers rejoice as rates for 30-year home loans edged lower for the second straight week, a report said Thursday, but remained above last month's record lows.

The average rate on a 30-year fixed mortgage was 5.06 percent this week, down from 5.09 percent a week earlier, mortgage company Freddie Mac said.

Rates dropped to a record low of 4.71 percent in early December, pushed down by an aggressive government campaign to reduce consumers' borrowing costs, but then rose steadily for the rest of the month.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.

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On December 16, the Federal Reserve Bank announced an interest rate cut to a range of .25 percent to 0 percent. This remarkable adjustment means the prime rate will drop to 3.25 percent. The Fed made this move to encourage banks to loosen their tight grip on money and stimulate the economy by providing loan funds for homes, cars, business financing, and personal credit accounts. This is welcome news to home buyers and sellers in the Orlando, Florida, area. Conversely, by reducing the rate paid for savings accounts and certificates of deposit, the Fed hopes business and consumers will borrow more and spend more, pumping money back into the struggling economy.

The lack of confidence in the current economy has resulted in banks clamping down on the flow of money. In his article for U.S. News & World Report, Luke Mullins quoted the Fed's Open-Market Committee, as saying, "Financial markets remain quite strained and credit conditions tight." This is evidenced by the decline in business investments, industry production and consumer spending. Ben Bernanke, Chairman of the Federal Reserve System, led the Fed's Open-Market Committee to this latest rate cut through his philosophy of throwing everything, including the kitchen sink, at the current recession to support a turnaround by keeping the rates low for a long time, at least until growth returns and appears to be on a stabilized upward trend.

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According to Bankrate.com, the benchmark mortgage rate fell by 5 basis points to 5.92 percent. A year ago the rate was 6 percent but it had increased during 2008. Only four weeks ago, the rate was 6.44 percent. Interest rate drops for six straight weeks have given home buyers a reason to jump into the market, and homeowners clamoring for lower rates caused refi applications to triple last week.

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