Thursday, July 01, 2004
Interest Rates Rise!
The Federal Reserve raised it's bench mark interest rate a quarter point (25 basis points) yesterday. This will help those who have money in savings accounts, but the rates on credit cards, auto loans and HELOCs will go up.
Higher rates will make it more expensive to borrow. This will create less borrowing, which in-turn means less money will be available in the economy.
This one quarter point move will have an impact on home buyers and could take some buyers out of the market. With the dramtic increases in real estate inventory levels and fewer buyers, price reductions will continue as we have been seeing over the last 6 weeks.
While this all sounds gloomy, over all home prices seem to be stablizing at January -March pricing. The overpricing frenzy is slowing and those home sellers that try to price over the recent sales are learning the hard way that the market has changed.
Higher rates will make it more expensive to borrow. This will create less borrowing, which in-turn means less money will be available in the economy.
This one quarter point move will have an impact on home buyers and could take some buyers out of the market. With the dramtic increases in real estate inventory levels and fewer buyers, price reductions will continue as we have been seeing over the last 6 weeks.
While this all sounds gloomy, over all home prices seem to be stablizing at January -March pricing. The overpricing frenzy is slowing and those home sellers that try to price over the recent sales are learning the hard way that the market has changed.
