If you watched CNBC today you likely heard "Bond Guru" Bill Gross comment on interest rates. His prediction is that rates will continue to fall, likely as low as 4%’s. 1% reduction in rate is the equivalent of a $10,000 reduction in price. So homes will be slightly more affordable. The big question is whether buyers who are taking advantage of the market will wait after hearing this news.
The bottomline should require you to ask these questions:
- Why am I moving?
- What is my motivation for moving? (yes ask it again)
- Why do I NEED to buy?
If you are buying investment property then there might be a reason to pause. If you are renting, you should have already bought something.
Here’s more from the interview:
"The mortgage rate will come down another 50 to 100 basis points," Pimco’s founder and chief investment officer said. "That’s basically what the government needs. They need a 4 1/2 percent to 5 percent 30-year rate in order to support home prices and, yes, to encourage refinancing and the process of reliquification within the economy. "
His advice: "[OWNERS] Don’t refinance yet. "
Purchasers on the other hand should move forward, especially, first time home buyers who should take advantage of the $7,500 Tax Credit while it lasts.
Some time next year, he sees stabilization coming to the economy, and lower mortgage rates are an essential part of that process.
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