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Federal Reserve Unanimously Decides to Further Decrease Bond Purchases

Last month, the Federal Reserve, in a unanimous vote, decided to further decrease its bond purchasing. The bond purchases were the government’s stimulus package created to keep long term mortgage interest rates artificially low in order to help drive the housing market. Most experts believe that tapering will cause interest rates to increase as we move through the year.

Interest Rates Expected to Increase

Interest rates have remained relatively stable since the onset of the tapering in December. But, moving forward, most analysts believe rates will start to rise resulting in a rate close to a full percentage point higher than current rates by this time next year.  

Freddie Mac, Fannie Mae, the largest government sanctioned entities, and The Mortgage Bankers’ Association and the National Association of Realtors have all recently projected rates to be between 5-5.4% at this time next year. This according to the folks at KeepingCurrentMatters.com.

The Advantage of Buying Now

Whether you are purchasing as an investment property, as a second home, or making Kauai your permanent home and primary residence, if you are procuring a mortgage, this may have significance for you. If the timing makes sense, buying sooner rather than later may save you a substantial amount of money over the long term in lower mortgage payments.

Over the course of the 15 or 30 years of your mortgage, even half a point in interest translates into a lot of money. I can certainly refer you to most reliable lenders on our island when you are ready to check out the rates for the different types of properties.

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