Interest Rates and the Housing Market Recovery

Economic Recovery after recession has been the slowest since World War in 1948. Governments policies in America have been aggressive for economic growth, while it seemed like that the Feds have used everything they had to make the economy grow, they suddenly introduced the Twist Operation.

Operation Twist allows people to buy long term bonds and sell short term bonds;  this action was carried out to increase the refinancing by offering a lesser rate of interest on long term bonds. This Operation Twist will increase the cash flow; such cash flow will help real estate, especially the housing business. This approach was well received. Although mortgage rates are expected to raise with this approach which may affect the housing business. Rates remain low, but the future rests with the level and rate at which they will increase.

Owing your own home is considered to be an essential part of the American Dream. No matter how much the Government involves itself in a free market, most of the time, the results can be a disaster. Around 2003, More Americans became home owners.  With demand came prices increase more thank the population did.  The prices began to peak at the end of 2006 and beginning of 2007. These prices were very high at the end of 2007. Meanwhile there are other statistics which tell us more about what  before this steep rise in prices, the ratio between median home prices and median income hovered around 3:1. For example, if an average home price was $90,000, average income was $30,000, a ratio of three to one. By early 2007, because home prices had risen much faster than incomes, this ratio expanded to over 5:1.

Are the mortgage rates going to rise? Will an average home price continue moving upwards? Is the US Economy trying to make a comeback?

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