Fed meeting announcment released today confirmed that the Feds stand ready to throw the kitchen sink, the dog, the canary, granma's teeth, and anything else they can get their hands on at the economic crisis we are deep unerway on.
They have been steadily buying mortgage backed securities (MBS) which has helped keep interest rates low. They intend to increase and expand their MBS purchases which will ensure that for the foreseeable future mortgage interest rates will not only stay low, but likely decline. Reats have creeped back up recently into the low 5% range but stand firm on our belief that before the end of February we will be in the mid to low 4% range on 30 year fixed mortgage loans.
The Feds also announced that they intend to keep the overnight lending rates between 0%-1/4%. In our opinion this is something that will continue for several years to come. This is great news for those with Equity lines of credit that are at prime (currently 3.3%-3.5%)! IF your lucky enough to have some money now is the time to take advantage of the low cost to borrower against it and use it make some money.
I have a family member with an equity line and have assisted him in using it for private lending (also known as hard money). He is in at 20% LTV loans on free and clear properties making 12.75% return on his money that is only costing him 3.3% to loan out :). More and more people are turnging to private investors as banks turn their back on everyone but Donal Trump and Opray Winfrey.
There are any number of ways one can take advantage of the current market. Stay positive, keep your eyes and ears open, and find a way to make this moment yours!
Wednesday, January 28, 2009
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