Time to Buy a House?

December 6, 2008

(ChattahBox) — For all those who had been waiting to buy their first house, now maybe the time. Housing prices have nose-dived drastically in the past one year from their peak levels in nearly every area of the country. Rates on 30-year fixed-rate mortgages are already close to 5.5 percent, and this week there were suggestions that the federal government might try to drive them down to 4.5 percent. This looks like an incredible figure to be locked for next 30 years.

The Federal Reserve has bought $5 billion of Fannie Mae and Freddie Mac as well as Federal Home Loan Bank corporate debt under a new program which aims at reducing the mortgage rates in the market. Fed Chairman, Ben Bernanke, announced his plan last week to buy $100 billion of so-called agency debt and $500 billion of agency mortgage bonds. The plan has been quite encouraging and has already spurred a drop in the loan rates.

The housing market still needs fixing as high inventory is killing the home builders. President-elect Barack Obama had proposed home-buying incentives built into new economic package. According to the analysts, if these incentives are done right they can actually help the housing industry and the overall economy.  Tell us what you think are we close to a bottom in housing or is it going to get worse before it gets better?


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