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July 1995
Interest Rate Trends
Last month was certainly a rocky road. After interest rates dropped to
their lowest point in two years, some better than expected economic
news caused an upward spike. The market feared the Federal Reserve
would not lower rates, however; more bad economic news followed.
When the Fed did meet, they dropped the "Fed funds" rate. (fed funds =
the short term interest rate banks
pay their regional Federal Reserve branch ... if they need to borrow funds
to meet the
Federal
Reserve's requirements.)
This marked the first time that the Fed lowered rates since the last
recession. Now, we must wait and see how the markets will react to
upcoming economic reports. The general forecast is for steady to slightly
lower mortgage rates. Individuals purchasing a home
or refinancing an existing mortgage may
want to lock their rate in during the next dip in rates.
The Real Estate Market
Sales of new and existing homes have improved or remained stable
throughout most of the United States. The lower rates should help
individuals qualify for larger payments, and therefore, more house.
Typically speaking, a homebuyer today can pay $10,000 - $30,000
more for a house, and keep the same payment, then if they had purchased
in the last two years. Anyone purchasing within the last two
years should be taking a close look at re-financing.
DANIEL BROUSE
E-Mail brouse@membrane.com
(800) 783-9333 x192
(610) 397-0330 x192
Beeper 215-960-5556
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