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Your Home, Interest Rates and Quantitative Easing

Monday, June 24, 2013   /   by Teresa Dipeso

Your Home, Interest Rates and Quantitative Easing

You have no doubt noticed the increase in mortgage rates in the last month - maybe that statistic has even caused you to wonder if NOW is the time to sell your home. Happily the real estate market continues to flourish despite average rates creeping to nearly 4%, although inventory still shows significant lows. Still, you may find yourself wondering how and if these rate changes could impact the sale of your home and the future of housing in your local market.


 


Interest RatesAn introduction into the Federal Reserve and it’s role in interest rates may help you understand its impact on your home. In the past the Federal Reserve, as the central banking unit in the United States, has largely determined current interest rates. The Federal Reserve monitors and maintains low rates to stimulate the economy as needed and raises rates to keep inflation in check. In recent history, however, interest rates have been dropped so low that the Federal Reserve began to utilize a system known as quantitative easing.


 


From a textbook standpoint, quantitative easing occurs as bonds and assets are purchased by the Federal Reserve from banks to infuse money into banking, allowing banks to loan more money. As individuals and organizations use the loaned money, jobs are created and the economy records growth, allowing the cost to borrowers to decrease, as bonds decline in supply, which in turn results in more lending and economic growth.


 


Several roll-outs of quantitative easing have been attempted in the last few years with varying success, however the Federal Reserve announced in fall of 2012, that shorter-term rates would likely be kept low until 2015, in an attempt to balance the job rate. Recent news indicates that a tapering of quantitative easing may occur earlier, as the Federal Open Market Committee evaluates current conditions.


 


As quantitative easing impacts home mortgage rates, any changes may have impact on your home, and awareness is key. However, home pricing and market trends are always determined by current interest rates, supply, and demand. To learn more about any of these changes may affect you, please give us a call to discuss our local housing market and the best plan for you and your home.

Teresa M DiPeso & The DiPeso Group Jersey Shore Real Estate Experts
Teresa M. DiPeso
Long & Foster
Avalon/Stone Harbor/Cape May/Sea Isle/Wildwoods, NJ 08202
609-780-1434

The data relating to real estate for sale on this web site comes in part from the Broker Reciprocity program of the Cape May County Multiple Listing Service. Real estate listings held by brokerage are marked with the Broker Reciprocity logo or the Broker Reciprocity thumbnail logo (a little black house) and detailed information about them includes the name of the listing brokers.
The data relating to real estate for sale on this web site comes in part from the Broker Reciprocity program of the South Jersey Shore Regional MLS. Real estate listings held by brokerage are marked with the Broker Reciprocity logo or the Broker Reciprocity thumbnail logo (a little black house) and detailed information about them includes the name of the listing brokers.
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