Over the last two years, Ben Bernanke has provided comfort to the mortgage market and real estate owners regarding the low, sustained interest rates we could count on, first through 2013 and now into 2014.
My cynicism at first was heightened. I kept thinking that sometime after the 2012 elections, we would be receiving the news on the Wednesday or Thursday after election Tuesday that rates were moving north.
I have become convinced my cynicism was overstated. People who are smarter than I am on this topic continue to make a good case for Dr. Bernanke’s logic. We still have high unemployment, there is still a lot of slack in our capacities, and the economy isn’t anywhere near great as I write this in early September, 2012. We have room for improvement before the economy begins to overheat, and if the Head of the Fed and the Investment Bankers seem to think rates will stay down, perhaps I should continue to sleep well at night.
Notwithstanding this last paragraph, something seems to be going on with mortgage rates.
Single family rates are up for the 4th week in a row, up from 3.66% two weeks ago to 3.75% last week. The treasury bond, a strong influence over rates, has increased by 18 basis points over the month of August. We have no “flight to quality issues” taking place right now, that always seems to improve the mortgage market, even if the rest of the economy or world is adversely affected. Finally, the stock market has been improving, causing investors to turn to the equity spectrum and away to lower yielding debt.
Is the market changing? I tend to think we are testing the upper end of a trough. It is not wise to bet against the Fed and the Fed is still saying comfortable pronouncements for continued low rates.
Well, then, should I get busy and refinance my apartments? Here are my thoughts on the issue:
- It is likely that rates won’t get much lower.
- Apartment financing can take time.
- The markets will likely stay low for any financing you undertake now and you will be able to realize a low rate that will sustain you for years.
- At some point, #3 above will not be the case.
If you are thinking about financing to access the low rates, now might be a great time to get going.