  We are now almost a month past the end of the first quarter of 2010, and the only thing everyone can agree on regarding the state of the economy is that many experts disagree if we are in a real recovery or not. Housing sales including new home sales have made modest increases. This should be a good sign that housing is starting to recover, but many experts feel this is the direct result of the stimulus program providing tax credits for buyers ranging from $6,500 to $8,000. In addition, the Fed was buying mortgage backed securities (MBS) until the end of March. In all, the Federal Government bought 1.25 trillion dollars worth of securities to fund residential mortgage loans in the United States. Now the government has to decide what to do with this huge investment. Talk has already started about selling some of these securities to replenish much needed cash to our debt strapped Federal Government. This is a big concern to many who follow the bond markets. They believe if the Fed starts to sell MBS too soon or too fast, rates are likely to jump up causing an immediate slow down in the recovery. Combine that with the fact that the stimulus program for buyers is quickly coming to an end and many economists fear what looked like a recovery could come to a quick halt. I believe if the Fed acts cautiously in selling MBS and do not start before next year, which is Fed Chairman Bernanke's approach, the housing market will continue on a slow but steady recovery path. The slow pace of sales the last 2 1/2 years has created pent up demand. For most of the country, the decline in values is over and stabilization or even modest appreciation has begun. As the employment picture gets stronger, consumers will once again look to achieve the American Dream - only this time at great prices with sensible loans they can afford. If you are in the market to buy or considering a refinance my advice would be to expect interest rates to be on the rise over the next year. That doesn't mean anyone should run out and buy a home that is not right for them or if it is not the best time to buy. Just be aware that the direction of rates is most likely up. If considering a refinance and you are certain you will be staying in the home for at least 2 to 3 years or have a good plan to use equity for something worthwhile, acting sooner rather than later will be to your benefit. Stephen M. Cors
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