3 Reasons Why Interest Rates Will Stay Low
The Top 3 Reasons that Interest Rates Will Stay Low
- The collapse in commercial real estate. Property values are down 35 percent since October 2007 and the majority of minds in the business believe that values will decline another 11-20 percent.
- The continuing fall in property values makes it difficult, if not impossible, to refinance as many as $165 billion dollars in troubled loans.
- Commerical property is a significant drag on overall economic growth and recovery. The country runs a major risk of another financial crisis, if lenders suffer unexpected losses.
Fed chairman Bernake told the Senate Banking Committee, “As the recessions’s gotten worse in the last six months or so, we’re seeing increased vacancy, declining rents, falling prices, and so, more pressure on commerical real estate.”
With commercial real estate in a Danger Zone, we predict that the Fed may be forced to leave the emergency lending rates close to zero, for longer than many pundits expect.
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Todays Article of Interest for Real Estate: What are Homebuyers Looking for When it Comes to Location???
We were right about low interest rates. The Fed’s did not raise rates today at 2:00est and said they would remain the same for the foreseeable future.
Not only were we right on about interest rates, but we got even better news than we expected. Mortgage rates dropped bug this week. Last week 30 year loans were at 5.75 percent. This Friday 5.375 percent. Wow, a drop of nearly a half percent for 30 years!!!!