How will the S&P Downgrade Affect Denver Real Estate?

The largest impact the experts predict will bewith rising interest rates. TheWashington Post explains it best. "The impact on your wallet fromthe downgrade is similar to what would happen if your own credit scoredeclined: The cost of borrowing money is likely going to go up."

The 10-year Treasury note is considered the basis for allother interest rates. And the downgrade could increase the yields on thosebonds, forcing the government to spend more to borrow the same amount ofmoney, the Washington Post article notes. Many consumer loans, such asmortgages, are linked to the yield on Treasuries and therefore would alsorise.

So in the long run, it appears this creditmess in Washington will cause interest rates to increase, especially withcredit cards, mortgages and car loans.But, in the meantime, with the stock market continuing to decline on adaily basis, interest rates continue to fall.As people take money out of stocks and put them into bonds, interestrates fall. Today, the average 30 yearfixed interest rate is at 4.03%!!!!!!!Let me say that again, 4.03%

So what impact does the Downgrade have on theDenver market? It is really difficult toknow long term, but for now it remains an amazing opportunity to buy and takeadvantage of these incredible rates. Wethought we saw the lowest rates we would ever see a few months back and nowthey are even lower. The Federal Reservetoday said they are going to keep rates low for the next two years to help theeconomy recover, resulting in the 11^th largest gain for the stockmarket ever. Will this result ininterest rates going back up tomorrow?

As you can see, it is a see-saw guessing gameright now. But the moral of the story issimple. If you are serious about buyinga home, or even if you are just thinking about it, rates near 4% are simply toogood to pass up, so why would you?