2015…Where Are Interest Rates Headed?

Westcoe Realtors, Riverside California…We at Westcoe don’t try to predict the weather. We wouldn’t be very good at it. However, if someone asked you about the weather right now, and you stood on a mountain top and didn’t see a cloud for over 100 miles, you would probably be pretty safe in saying there is no rain in the in immediate forecast. No expertise needed for that, only a little common sense.

Well…predicting interest rates is sort of the same thing. There are lots of “experts” who are quite willing to give you all sorts of long-range predictions about housing interest rates for 2015, and given enough predictions, some are bound to be right (blind squirrel and the acorn theory). However, we think the application of a little common sense will get us almost as far as the intricate economic equations.

So…here we go. For the short term (3-6 months), interest rates are going NOWHERE. We are on our mountain top, and not an interest rate cloud is in sight. Full speed ahead, there are no Titanic interest rate hike icebergs lurking nearby. Relax, and enjoy the ride.

One doesn’t need an advanced degree to see that all the usual indicators of interest rate hikes are so far down the road as to almost be invisible. The economy still needs a bit of a housing boost, oil prices are dropping like a bad TV show’s ratings, interest rates the government is paying on it’s Treasury notes is so low as to be almost non-existent, and my left toe does not ache, which is always a sign a rate hike is coming. (ok…that last line was just to make sure you were still reading). All of the above usually are pretty good indicators of interest rates…and all are doing just fine.

So…since our interest rate prediction for the foreseeable future is pretty clear, the real question is what are you going to do about it?

If you own a home, you should have already re-financed your existing loan by now…but if you haven’t, then what are you waiting for? We are pretty conservative around here, so our advice is to not pull out any cash (unless you have a real pressing need…and a new boat is not exactly a pressing need), and just lower your monthly payments. Who doesn’t want to pay less for something? Lower housing payments are a good thing.

And if you are a buyer, trust us on this…there will come a time when you would beg, borrow, or steal to simply have a 30 year fixed mortgage rate as low as the one you can get today. If you are under 40 years old, ask your parents about this…they will regale you with horror stories of housing interest rates from 7-17%…and not in the time of the dinosaurs either. When housing payments are cheaper than rent, it’s time to buy. It really isn’t any more complicated than that.

In the end, you-are-going-to-do-what-you-are-going-to-do…but from our perspective as professionals who deal in this every day, get on this train before it’s too late. As we said, the interest rate train is not leaving the station any time soon, but it will pull out one day…be sure you took advantage of it while you could.

Thanks, and as always, thanks for reading our blog. Let us know if there is any issue you would like to see us address in the future.

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