The Federal Reserve Board’s announcement regarding the federal funds rate was given major importance by the media recently, in spite of the fact that it’s only one piece of the nation’s financial conundrum. Sure, the Fed funds rate isn’t tied directly to the mortgage interest rates in Ladera Ranch, however it does tend to have a significant effect on the cost of borrowing.
Mortgage interest rates in Orange County have historically been fairly close to the bottom of the price range. The low monthly payments that were a result have been enjoyed by numerous homeowners in Ladera Ranch for a number of years now. As a result, sellers in Ladera Ranch also reaped the benefits of those low rates because they made their homes more inexpensive by comparison.
The main reason that the media nationwide was so highly anticipating the announcement from the Federal Reserve was actually the repercussions that were expected to hit the real estate market. Up to ten minutes prior to the announcement, statements about how much Wall Street would be closely watching and other breaking news about the decidedly probable outcome were streaming on television screens, not just across the country, but around the world. Even the real-time data that was streaming at the same time, like how the stock market was up, oil down, China remaining large and mystifying, and even optimistic statements about how higher interest rates wouldn’t really hurt the economy, couldn’t quell some people’s fears about a rate hike, and especially about how much it would affect the nation’s real estate markets.
And, then the announcement came and it was no different than it has always been since 2008. There would be no change. The spokespersons for the Federal Reserve said that, since housing had been improving somewhat and the economy and been expanding at a reasonable pace, they would simply continue to monitor global financial conditions rather than raising the interest rate.
At that point, all that fervor that the media everywhere had been exhibiting, fell flat on its face, and they all blamed everything on the historic uncertainty of the Federal Reserve. There was no immediate reaction from the stock markets, but a mixed closing followed later in the day. And, mortgage rates actually dropped a bit the following day.
So, OK it may have been a bit anti-climactic for the media, as they wondered what they could get excited about now. On the other hand, it was excellent news for many consumers. This announcement gave Orange County consumers and would-be homeowners good reason to think that the local mortgage interest rates could remain low at least for some time to come. In fact, they usually do when the Fed rate stays pretty close to zero. However, according to the website “The Street”, a rise in rates prior to the end of 2015 is anticipated. In view of the poor track record for predictions of late, a safer bet could be to say that the next time the Federal Reserve makes an announcement; it could again be the most predictable one in many years.
But for now, in case you’ve been thinking about taking advantage of the current low mortgage interest rates and buying or selling in Ladera Ranch, call me. I can help you with either one while the buying climate is hot and mortgage interest rates are not.