With all the changes that have occurred in recent months one thing seems certain, that if you
want to purchase a new home you have only a few months to take advantage of the great opportunity that is here now!

 

 

Sometime in March 2010 the Federal government will stop purchasing mortgages, this will
result in an increase of the prime rate.   After all banks will not be able to purchase these notes
at artificially low rates.

The Home Buyers tax credit is set to expire in April, and the Government has already said that it will not renew it.

Currently the artifically low interest rates and the home buyers tax credit have stimulated the housing market. Together both have created downward pressures resulting higer than normal sales and lower inventory. Once both of these programs end, both inventory levels and interest rates will begin to increase.

 

                                  “As the Fed begins to wind down its purchases
                            in the next few months, rates will become less
                            enticing.  Analysts expect them to rise to at least 
                            percent from the current 5 percent.”

                           - NY Times 10/24/09

  

It is likely that home prices will fall by 10% and interest rates will begin to rise, they could reach 8% very quickly and dramatically! As this occurres, home buyers will also begin to lose their purchasing power.

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