Federal Reserve Chairman - He is at it again...

I will not tout myself as an expert on economic policy. However, if you have read any of my previous posts, I do have an opinion. MR Bernanke used the dreaded "I" word again in his statement this morning in front of the Congressional committee. However, for the first time in my recent memory, it did not immediately send the interest rates soaring upward. The fact that he mentioned the "I" word does cause some concern for those of us that were hoping that the Fed would lower the discount rate and thereby signal all of the banks to get back to reality in terms of the 30 year fixed rate that they were offering to the public. It appears that since the Fed chairman still has his inflationary concerns, and maybe they are well founded. Please read where I said earlier that I am not an expert.

However, it is my opinion that we will most likely see rates lower over the next few months as the banks see how the government is going to be helping out their portfolios by holding on to some of their less desirable paper. Although, yesterday I was hoping for a Fed cut to discount rate to allow the banks to be able to save face and lower the rates quickly and jump start the housing market by bringing a deluge of new buyers into the market. All of us who have seen the rates that were offered when the discount rate was at 4-5%, know that the banks are gouging the public with the spread between what they get the money for and what they are selling it back to us for.

Ok, now to the important news, rates are probably going to slowly get better, but most experts are still recommending that you lock if you are closing this month. Of course, check with your loan consultant to get advice on your own situation. There are going to be more buyers slowly coming into the market, but the market should see an uptick in the number of qualified buyers, and the really good news is that there is plenty of inventory for buyers to look at right now. Again, my opinion, but if you see rates get more in line with the market, your more well informed and intelligent buyers will get into the game.