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On the up and up: housing, rates and gas prices

Posted September 18, 2013 in Advice Column, Ankeny

In mid-July, Federal Reserve Chairman Ben Bernanke attempted to soothe the markets’ fears about home loan rate increases. As a result, bond prices bounced higher from lows not seen in two years, and stocks traded at all-time highs. Indeed home loan rates have certainly moved up a little, down a little.

Bernanke also repeated that the Fed Funds Rate, which is the rate at which depository institutions actively trade, would remain low for an extended period. He said that if circumstances warranted, “tapering” could begin later this year and end sometime in mid-2014. And just if you weren’t sure what “tapering” was, it’s a reduction in the Fed’s purchases of Treasury and bond assets in attempts at helping the economy get back on track.

As the economy continues to improve stateside, political turmoil in Egypt has caused a spike in oil prices, keeping the region under close scrutiny. Also of note is the recent downgrade of Italian credit by S&P. Spain could be next.

Housing continues to be a bright spot for the economy, with the purchase index inching up and proving that people are out buying houses and using credit. The National Association of Home Builders also confirmed that builder confidence rose last month to its highest level in more than seven years. Despite the recent rise in home loan rates, they remain low when compared to historical levels.

If you have any questions about your personal situation, please call me at 515-964-5626.

Information from You magazine, provided by Gary Presnall, president and residential loan officer, Valley Bank, 210 N.E. Delaware Ave., 964-5626, gpresnall@valleyb.com.





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