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WOW – that’s a low price!!! Have you seen that Staples commercial? That’s how amazed I am with recent mortgage rates. 30 year fixed at less than 4.50%? 15 year fixed under 4%?But why are they so low? Remember when the Fed stopped buying Mortgage Backed Securities? Mortgage rates were supposed to rise. What happened?What happened is a trickle of economic concerns. First several European countries started having debt doubts. The US economy marches on shaky legs. North and South Korea refuse to play well together. It all makes investors nervous.So what is a safe haven for investors’ precious dollars? Bonds – including mortgage backed securities – with their guaranteed return. When the Fed intervened in late 2008, it crowded out a lot of regular bond investors. Since the Fed’s out of the game and uncertainty is in the air, bonds are quite attractive.When will rates go up? Hard to mark a date but the precursors will be: inflation – a recovering US economy – encouraging commentary from the Fed.In the meantime remember for each 1% reduction in rate, a buyer’s purchasing power increases by about $15,000. Pare these low (LOW!) rates up with the great deals in the housing market, and you’ve got a winning combination. Want to see how it impacts you or someone you know? Drop me a line and we’ll discuss details. -
News You Can Use
Today is Cyber Monday when sales and deals abound. Mortgage rates seem to be joining in with rates at record lows – the lowest we’ve seen this year since April. These low rates are back because bearish traders are nervous about the strength in recent stock market gains and implications of riskier asset holdings (Dubai World anyone?), so they are favoring safer investments and Mortgage Backed Securities reap the rewards. This influx of cash into the MBS market gets passed on in the form of lower rates. Fun fact: did you know a 1% decrease in the interest rate can increase a buyer’s purchasing power by approximately $15,000?
Couple these low rates, add in a homebuyer tax credit and you’ve got a big jump in sales for October – a 24% increase in purchases, compared to last year. As if lower rates and an increase in sales weren’t good enough, it was also reported last week that national home prices rose for the second straight quarter. The American economy certainly isn’t out of the woods yet, but every little bit helps.
So with all this good news, how do we spread the word – how do we make buyers buy or sellers sell? We can’t…what we can do, and what we should do is be a resource for information and help clients weigh their options. In short – be part of the solution.
This week will have important economic reports released each day except Monday. We’ll hear the latest on November’s employment numbers and the ISM Manufacturing index. Let’s see how it all plays out.
Featured Loan Program
Mortgage Credit Certificate
Cunningham & Company along with North Carolina Housing Finance Agents offers the Mortgage Credit Certificate program to help qualified homebuyers obtain a federal tax credit.
- Must meet income requirements, sales price, and first-time home buyer guidelines
- MCC can be used with almost any type of mortgage, including adjustable rate mortgages.
- Eligible buyers can claim 20% of their mortgage interest (up to $2000)
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