Mortgage rates dropped to levels not seen since June this week. The government re-start and a weak jobs report means the Fed will keep pumping money into the economy and this should keep interest rates low. Fear of rising interest rates pushed people into buying mode in the Spring but then as they inched up we saw demand slow in August and September. The shutdown hurt demand as well as buyers decided to take a wait-and-see approach. Now with the dust settled for the moment in Washington and lower rates coming we’re already seeing business pick up.
The rate on a 30-year fixed rate mortgage averaged 4.13 percent this week, down from last week’s 4.28 percent and the 15-year fixed mortgage rate averaged 3.24 percent, down from 3.33 percent last week.
Thinking if buying or selling? Then you need to be talking to your agent to find out what your best strategy should be in this quickly changing market. Give us a call or shoot us an email and we’ll be happy to help you out.
If you’d like more info on rates then check out this article from USA Today.
We’ve been seeing interest rates increase pretty steadily the last few months. This tends to depress demand and home prices. But we’re still seeing price increases. July’s numbers again show a gain of 12% over the same time a year ago. From Diana Olick at CNBC,
‘Despite rising interest rates, home prices continue to surge higher. The latest read shows values, including distressed properties, up 12.4 percent in July, year over year, according to a monthly CoreLogic report. That’s higher than both May and June’s annual increases.
This is the 17th consecutive month of annual gains for home values nationally. Prices were up 1.8 percent month over month, according to the report.’
So what does the future hold? Demand is still steady whil inventory is still low. Here at homesinatlanta we expect to see more price increases (but modest ones) and those increases will continue to slow both from higher rates and due to seasonality of the home buying season.
We’ve been enjoying super low mortgage rates since about 2008. They’ve helped the real estate market to rebound and help a lot of people get some great mortgage deals. However, in the last month mortgage rates have gone from an average of 3.3% to 3.8%. That’s a pretty big jump in a short time. What gives? First let’s talk about the reason for the low rates. The Federal Reserve has been pumping money into our economy and at the same time loaning money to banks at virtually 0%. These actions have made borrowing money very cheap. Now the economy is improving and The Fed is now putting out signals that it’s going to slow down and let the economy run on it’s own. They’re talking about changing this fall but just putting out the word has caused fewer people to buy bonds thus pushing interest rates up.
What does this mean for me ?
In the short term I’d say we can expect interest rates to creep up. If you’re thinking about buying you need to be moving fairly quickly. But if you’re a regular reader of this blog you know that already. We’ve been warning you for awhile about the inventory shortages and higher interest rates. If you’re thinking of selling you may want to push up your timetable as well. Higher interest rates can have a negative effect on prices. But it’s not time to panic. A 3.8 % average mortgage rate is still ridiculously cheap to borrow. So what’s your situation? Give us a call today and we ca advise you on the best course of action.
If you’re thinking of getting an FHA loan you may want to move up your schedule a bit. Because of loan losses FHA mortgage premiums are going to increase on April 1st. On most loans the increase will be about $100 a year per every $100,000 of your loan. If you want to avoid this increase you should apply for your loan prior to about March 25th.
There is another change coming down. In the past FHA would drop your PMI after about 5 years. For loans starting in June most borrowers will pay this PMI for the life of their loan. Talk to your lender (we can recommend a good one for you) and get the latest advice on how you should proceed from them. For more details on this change check out this article from sfgate.
A new report by the Home Data Index shows what we’ve been seeing in the Atlanta housing market. Home prices have stabilized and are expected to increase by year’s end. Supply in Atlanta has tightened up and we’re seeing more properties sell quickly and/or go to multiple bids. We’re also seeing more investors start to move back in to the market. So what does this mean for you? If you’re thinking of selling but can hold out, keep doing that. If you’re thinking of buying but have been on the fence you need to consider making a move. At least be getting your down payment in a liquid position so you can act quickly. If prices trend upward we’ll see interest rates creep up as well (we’ve already started flirting with that this month). And if you need advice about what to do, contact us and we can give you the latest information about what’s happening on the ground in your neighborhood.
Banks and mortgage companies are loosening their lending standards as they work through their foreclosures and as default rates fall on new mortgages. This means the housing crisis will end in 2012 according to this article from DSNews and Capital Economics. Well, I wouldn’t go that far. Getting a loan has gotten easier. Banks are now lending up to 3.5 times earnings from a low of 3.2 times earnings and lenders are loaning on average 82 percent loan-to-value from an average of 74 percent LTV. This is good news but we need to see employment continue to improve to really see a sustained recovery. There are quite a few indicators that show an improving real estate market but it’s not time to pop the champagne yet. Keep an eye on these factors the next 3 months as the first two quarters of 2012 will really tell a story. But, and this is a big but ! If you think you may want to buy in the next year you need to be paying close attention. There is a lot of pent up demand in home buying and when this market comes back it will come back hard and fast. And if you’re not ready to move you may end up paying a lot more and miss out on some great opportunities.
According to this article in Bankrate, mortgage rates mostly remained unchanged this week. They called them ‘ultra-low’ and that’s a fitting description. It’s part of the dilemma of todays real estate market, here in Atlanta, and across the country. Buyer’s are squemish about buying. Many are thinking that prices may drop further so they’re holding out for lower prices. But those that sit on the fence may find out they’re going to pay a little less for their home and at the same time pay more for the money they borrow, and they’ll end up paying MORE in the long run. So if you’re thinking of buying, it’s a good time to be checking your finances and comparing different interest scenarios. If you have any questions feel free to contact me for some no obligation advice.
Once again we find how difficult it is to predict ineterst rates. The Fed, along with everyone else predicted higher interest rates this year. The consensus, both nationwide and here in Atlanta was rates would increase from about 4.5% to about 5.5% by the end of the year. But lately we’ve deen backsliding on rates. It looks like concerns about the World economy have people buying more U.S. Treasuries which helps push down rates. Chicago Breaking Business has the full article here. So where are interest rates headed now? Hold on while I get out my Ouija Board !