A Word From Our Preferred Lender: Robert Fightmaster with the First State Bank

The Great Recession 2.0

In 2007 the United States economy was in crisis.  The housing crisis along with record high prices for gasoline had many Americans on the verge of financial disaster.  Stock markets plunged, home values plummeted, while unemployment soared.  The Federal Reserve’s target rate was 5.25 %( the interest rate that banks can borrow funds from the government or other institutions usually overnight).  In an effort to help the economy stabilize the Fed lowered their rate to 0%.  This action along with some other Federal Reserve bond purchases continued until 2015.  During this time Americans enjoyed a long run of the lowest interest rates in our history.  The stock market has fully recovered and in fact has almost doubled in value.  Unemployment numbers are some of the lowest in the last 50 years.  Let the good times roll.

Role of Federal Reserve Board

The Federal Reserve acts as the central bank of the United States. The "Fed" was instantiated by congress and was put in place to stabilize and formalize the banking system within the country. The primary role of the Federal Reserve Bank is to implement monetary policy to keep a balance between steady economic growth and high levels of inflation.

Fed Policy

In 2015 the Fed put in motion steps to keep the economy rolling while at the same time try to control future inflation.  The bond purchase program reversal was started and the Federal Reserve’s target rate was slowly increased. Since 2015 the rate has been increased 8 times.  In September of 2018 the Fed rate was increased .25% to its current level of 2.25%.   Economist estimate that the increases will continue slowly in 2019.

Mortgage Rates 2018

Interest rates for most well qualified borrowers stayed below 5% for most of this year.  The Federal Reserve hikes, strong economic numbers and a trade war with China have caused a recent surge in mortgage rates to a level of just over 5% for most borrowers.  History tells us that today’s rates are still some of the lowest we have seen since the 1970s.  Economist predict that the Fed is not finished with their increases and we will see more of the same slow increases in 2019.

Protect Your Investment

How can you protect yourself from rising rates in 2019?  The First State Bank offers a long term lock for new construction homes up to 270 days.  Most lenders charge a 1% deposit or fee for this service.  The First State Bank does not charge a fee for our long term lock.  If rates are lower than your long term lock you are allowed to float down to the lower rate within 30 days of closing.  This allows you to build your home without the worry of what your future payment will be.

Summary

Americans are enjoying a robust housing market.  Values across the country have increased to pre-crisis levels.  Baby boomers are building their retirement dream homes.  Millennials are starting families and ready to own their own piece of the American Pie.  Prospective home buyers that found themselves less than credit worthy 10 years ago have fully recovered and are re-entering the home buying market.  Options for homeownership in Oklahoma range from rural to urban core for the first time in decades.  2108 and 2019 will continue to offer homeowners affordable mortgage options all with the conveniences of a modern paperless world.  The good times are still rolling