This week we have two clients that are closing on their homes in Layton and Syracuse. These first time home buyers will be enjoying the benefits of low interest rates and the $8,000 tax credit. During the last two weeks they have been able to lock their loan rates in the low 5% range and obtain seller concessions to cover most of their closing costs. The absorption rate, which measures the rate at which homes are selling, have temporarily changed from a Buyer’s market to a Seller’s market in some cities in Davis County. This is a result of buyer pressure to use the tax incentives and low interest rates before the tax credit is set to expire at the end of this month. Interest rates have returned to their lows of earlier this year.
In today’s Wall Street Journal, the future of interest rates are discussed with the general consensus that interest rates will increase in the future, reducing the affordability of new homes. In general, lower interest rates caused by the government’s backing of security based bonds will not last forever. There will be a raising of the interest rates in the months ahead even thought it will be slow and gradual. In the past, low interest rates have been followed by steeper increases in rates. High unemployment numbers and a very fragile economy will keep the Federal Reserve conservative in these increases.
The point is this, first time home buyers should not delay their purchases but should take advantage of the $8,000 tax credit, which is likely to be extended into 2010, and low interest rates while they last. Homes have never been more affordable than right now and waiting will only add to the risks on increased mortgage costs. For more information on how fast homes are selling in you specific neighborhood, please contact me directly.
Posted By: Steve Randall