Friday, December 4th, 2009 the labor department announced that the unemployment rate had dropped to just 10 percent This drop in unemployment is a signal to homebuyers that while the holiday season is traditionally not the time to look at purchasing a home, perhaps you should re-examine your old views in light of the new “norms”.
Normally a drop in unemployment would signal an interest rate hike, but these are not normal times. Normally a homeowner would refinance after the holidays to consolidate debt, the new “norm” is to refinance now. Normally home purchasers would wait for warmer weather to start looking for a home, the new “norm” is to buy now and take advantage of tax incentives before 2010. Normally banks would be offering low interest and zero interest to attract new customers, the new “norm” is for interest rates on credit cards to skyrocket. Nothing about this holiday season is traditionally normal.
Congress did not set the homebuyer incentives to expire in the summer; they set them to expire in the spring. March and April are traditionally the months people start looking to buy a home. Coincidentally, March and April are also the months when we start seeing drops in the unemployment rate. If employers start hiring in the spring, like they traditionally do, interest rates will go up, and your purchasing power will go down.
Did you know that a slight increase in interest rates of just one quarter of a percent could significantly increase your mortgage payment? On Friday, when the new unemployment numbers came out, investors were fleeing commodities. If investors start looking at mortgages again as a safe investment the interest rate could jump to 7% or more by April.
Since nothing is normal about this holiday season why not save thousands in interest payments simply by doing something you would not "normally" do.