All About Real Estate Updates
The economy has a direct bearing on how well or how low the real estate can become all over the world. This is why it is critical to be in touch with the latest news if you are in the real estate business. It is a good idea to sign up for Real Estate Updates to ensure that you have your hand on the pulse of the industry. In recent news, the Federal Reserve had cut interest rates in last September. Many people mistake this to mean that the mortgage rates to go down as well. However, the mortgage rates and the interest rates are not exactly tied together. An apt example of this is when in 2003, the Federal Reserve had adjusted the interest rates and no visible effect as seen on the mortgage rates, causing many house owners to default on their payments and lose their homes finally.
Interestingly, many homeowners become suspicious when they do not see their mortgage rates go down even after the interest rates are reduced. This is why real estate agents need to be well informed to make sure that their clients understand how the mortgage rate is not affected by the interest rate. Since mortgage rates go up or down based on the how investors are concerned about the current long term inflation, the interest rates do not actually play a role here. In case the investors believe that inflation will be going up in the near future, the mortgage rates also rise according to the experts in the real estate industry.
When interest rates are reduced by the Federal Reserve, it is actually in response to the declining interest rates within the economy. As a result of this, the people who are affected the most are homeowners who paid a small down payment and managed to get an adjustable mortgage rate. In recent times, they have noticed that the interest rates go high and the value of their homes go down at the same time resulting in a double whammy situation. This results in payment becoming higher and not being able to refinance their homes either to make the payments more affordable.
However, all news from the real estate industry is not that bad according to the experts in the industry. With the home prices going down, many first time buyers are finding themselves able to afford homes without having to spend too much. So many people who have been renting till now are looking at owning their own homes for the first time as a result of the change in the interest rate. This encourages more people to get out of renting homes and investing in their home, saving money in the long run. This boosts the real estate business as well, enabling real estate agents to land plenty of first time buyers as potential clients. In fact, many real estate firms also offer a special reduction on agent commission fees to encourage first time buyers to put down the down payment on their first home.