Melbourne Area Blog

It is a buyers market when supply exceeds demand. Studies show that real estate in Brevard County is under-valued by about 20%. Add in the low interest rate and it is a great time to by.

There are several other reasons to buy now. The First time home buyer tax credit will expire in a few months. To qualify for this program you must purchase a home by November 30, 2009.

Another program that many are not familar with concerns the Federal Reserve and interest rates. This is a program where the Fed purchases mortgage backed securitie (MBS) on a weekly basis. So far the fed has purchased $681.90 billion (54.5%) of the $1.25 trillion allocated for this program. Only fixed rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae are eligible. Here is an example of the numbers: for the five days between July 16 and July 22, the Fed pruchased a gross total of $21.245 billion agency MBS. During the same tme period the Fed sold $120 million agency MBS. The weekly net purchase total was $21.125 billion.

These numbers show just how we are purchasing our own debt to keep interest rates low. When this program expires it stands to reason that we will see interest rates on the rise.