Monday, 11 June 2012

Interest Rates, Retirement, and Housing

With interest rates for home loans at some of the lowest points in recent history (the lowest since the aftermath of World War II), many homeowners and people looking to buy homes are seeking mortgage loans. But another effect that is being observed is the delay in people retiring from their careers.
Several reports cite the survey (Wells Fargo/Gallup) that discovered a large percentage of people have decided to work longer to make up for the poor returns on their investments (low bond yields).
This cycle is interesting as it affects both the housing market and growth of jobs (less retiree relocation and hiring of new employees to replace retirees).
In areas such as San Diego, CA, with many colleges and major industries in biotechnology and government  - this is very evident. The real estate market there is very dynamic and looking at the state of refinances/loans from mortgage companies in San Diego, business are ready to help. As lenders loosen restrictions on loans, property values increase, and hiring picks up, the surge in activity will be very evident. The next cycle will cause a  rise in rates and improve the return of bonds and similar investments. The eventual apex from the trough will then start another cycle.

No comments:

Post a Comment