Seattle Real Estate braces for a spike in Interest Rates
Home owners locally in Seattle and across the country brace from a spike in interest rates led by the 5 year bond auctions which triggered a sell off in mortgage back securities as massive amounts of monies moved to treasuries. What is the significance in this you may ask? Mortgage Rates spiked from 4 week lows of 4.75% to 5.50% in one trading day. Mortgage Back Securities lost close to 207 basis points which defined the deterioration in interest rates. For so many companies that we advertising rates to still fall below 4.50% we would ask what would be their comments today. The Federal Reserve still has not purchased bonds below the current levels which would trigger rates to go lower. With the lack of purchases of bonds which were auctioned today there is still significant doubt on Wall Street for long term investments. We encourage all home future and home owners to consider signs of recovery in the numbers. If economists are correct that the recession is coming to an end by the close of summer, moving into the holiday season could shed much needed optimism as consumer confidence returns from the doom and gloom christmas of 2008. The question for housing will be if rates will maintain historical lows or if they will fall victim to inflation and begin a steady increase over years to come. Keep in mind the reason why rates are low right now is because of the Federal Reserves intervention and security to continue to purchase these financial vehicles.
More to come as we shift from the Weekly Recap on Friday’s to bring you a powerful tool on Monday’s with the Weekly Kickoff. This will begin June 1st, so stay tuned.