What to Expect During the First Quarter of 2010
Posted on | January 4, 2010 | No Comments
Over the holidays I did some research on what most “experts” (at least that is how they cast themselves) were saying about the coming year 2010 and found a common thread that had to do with what will happen as the government starts to back out of holding the interest rates down as well as helping buyers with tax credits. That common thread was that interest rates will be lowest in the first quarter of the year; that’s now through the end of March. The reasoning is simple, once the government lets the market take care of itself; interest rates are expected to go up.
This may seem like a really bad deal but most economists believe that a healthy economy should have a working interest rate of somewhere between 7 and 8.5%. If were buying a house in the early eighties you would have given your right arm for an interest rate in the 8’s because many of us were paying 12 to16% in that rough economy. As much as I don’t want any of us to go back there I do think it is important to put things into perspective and realize that our economy will not grow unless rates eventually go up to a healthy place. Investors don’t want to invest if they can’t make money so eventually, it has to be a win, win for everyone.
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