All ears concerned with real estate and interest rates were peaked yesterday as the Federal Reserve Bank was scheduled to make an announcement.
Basically, the FED controls interest rates to either stimulate the economy or control inflation. The announcement yesterday was that the FED was reiterating an earlier announcement of keep interest rates at their current low for a “considerable time”. In their announcement, they talked about how the economy is only making gradual improvements so they have no desire to raise the rates yet. They will be working through a slow process to start raising the rates maybe come 2015 and as late as 2016. But for now, GREAT NEWS FOR BUYERS AND SELLERS! Interest rates will continue to stay low for “considerable time”.
How does the FED control interest rates?
Money.howstuffworks.com gives a great explanation:
“If the central bank wants to lower interest rates, it buys a lot of securities, infusing the banking system with cash (kind of like in the old days when the Fed actually controlled the amount of money on the market). With more money available, interest rates decrease. If the Fed wants to raise interest rates, it sells securities. This adjusts the federal funds rate— what banks charge one another for short-term loans. The Fed can also adjust the discount rate, which is the interest rate it chargesbanks for loans obtained directly from the Federal Reserve [source:FRB New York].”
If you are planning to purchase or sell your home, it is a great time to buy or sell! With interest rates remaining low, it helps buyers have a better rate on their loans and it helps sellers because people will be more motivated to buy their home while interest rates are low.
If you are looking to buy or sell in the DC Metro area, give us a call so we can help you better understand the process and how the interest rates can help you now!
