Real Estate and Mortgage update
Two big news stories out today!
1.Pending Sales are up 6.3% (highest since Sept of 2008) – on the heels of existing home sales being up 6.5% (cutting inventory to just over 8 months nationally)!!
2.The government will include provisions in the Stimulus package to push mortgage rates down to 4%.
The first is a fact – and a great one at that! There have actually been limited communities reporting slight appreciation. The second story is yet to be seen. As activity continues to pick up as a result of low low prices and low low interest rates, it is no mystery that even lower interest rates would help get some buyers off the fence and into the buying mood. Right now it’s a bit early to bank on the Fed “influencing” mortgage rates down to 4%. It is important to remember that the Government doesn’t “control” Mortgage Rates. However, with their billion dollar mortgage bond buys they sure have done their share of pushing them down to the current 5% - 5.5% range in early 2009.
If you think back to a year ago, buyers would have been overjoyed with these types of rates. It is too soon to tell and sell the 4% whispers we are hearing again. I can tell and sell you that the one and only way that mortgage rates will go that low is if the Fed steps in and purchased mortgage backed securities more aggressively than they have been. At that point sustainability becomes the question – how long can the Fed hold rates down or how much $$ do they have?
All in all we are still seeing some of the lowest rates in history right now, and coupled with the low prices out there it is a great time to buy. BTW - the latest little increase we have seen in rates is seemingly coming to an end. Look for the end of the week to provide some relief in mortgage rates.
