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The Fed today pledged to keep their key interest rates at the near-zero level. In the 'old' days this would likely signal that conventional mortgage rates would remain at their current low levels. However, the Fed also announced that they will stop purchasing mortgage backed securities at the end of March. Some analysts had thought that mortgage rates would likely spike when the Fed stops, but some now feel that any rate increases will be minor. Read the story on the CNBC website.... Here.
Sometime in the near future the Fed will stop buying the much-maligned mortgage backed securities. Almost everyone agrees that the inevitable result will be an increase in the home mortgage interest rates, now hovering at the 5% level. Some feel that the increase will be in the 1% range (bringing the rates to the 6-ish % range). Others, including the linked article, say that the increase will be minimal, in the 0.1% to 0.15% range. Read the article on the Wall Street Journal's MarketWatch website.
News - The 30 year fixed rates have dropped to a decades old low. The national mortgage rate has dropped to an average of 4.71%, according to the weekly survey conducted by Freddy Mac. Wow! Interestingly, the article points out that these rates can't last too long and will likely go north of 5.5% by the 2nd quarter of 2010. Read the whole story on CNBC.com.
When it comes time to apply for a mortgage, your credit score will play a big part in the rates the banks will offer you. Your score, known commonly as your FICO score, is similar in many ways to the old SAT scores we used to get into college. The score runs from 300 (awful) to 850 (really, REALLY, good). A Money Magazine article, published online on CNN Money.com, provides a number of strategies for improving your score - a wise idea prior to applying for a mortgage. You will see that the task of improving your credit is as much an 'art' as it is a 'science'.
Can the end possibly be in sight? Have we passed the housing bottom?Two observations ... First - picking bottoms will be very unsatisfying. When it comes to buying a home, being close to the bottom is good enough. Second - with mortgage rates near historic lows and home prices lower, Now is the time to buy on Cape Cod.
If you own more than 20% of your home, you can simply go to your lender (or any lender) and refinance your home at the current, historically low, mortgage rates. But, with the decline of home values, this option may not be available to you. How do you know whether you qualify for help under the Federal Mortgage Assistance Program? The Washington Post ran an article that addresses this question. Read it ...Here.
Even the Financial Times says its time to buy on Cape Cod. The article titled "In Cape Cod We Trust" highlights that the time of opportunity is now. My RE/MAX Classic colleague, Thom Schoepfer, is quoted in the article. Thom said, “The Cape holds a place in the hearts and minds of people and there’s real value here. You get it from personal enjoyment and use, income if you rent your home out and appreciation if you hang on to it.”
It's a classic example of the law of unintended consequences. Some experts feel that the Fed's move to lower mortgage rates in order to stimulate the economy via an improved housing market may not deliver the expected results. In fact, the vast majority of new mortgages are re-fi's which won't provide any real help to the housing market, since no homes are bought and sold. Go to the article on CNBC.com to the whole story.
That's the first sentence in a CNBC web article, highlighting the historically low mortgage rates and the expected influx of new listings (eg inventory). One possibility, highlighted in the article, is that folks will 'move up' to a larger home. Although they will receive less that they hoped for their current home, they will be able to get the 'new' home for a bargain price AND with a great mortgage rate. Check out the CNBC article.
Jim Cramer's response to this afternoon's announcement by The Fed that the key federal funds rate will remain unchanged in a range between 0% and 0.25%. The Fed also promised to keep that figure low for the foreseeable future. Cramer has been calling for 4% mortgages and refinancing for all homeowners and buyers, and he thinks today’s announcement allows for that. Go to the CNBC website and read the whole story.
"The U.S. economy will not recover until the housing market revives", said Senator Johnny Isakson (R-GA) as he renewed his call for a $15,000 homebuyer tax credit to be included in the economic stimulus package now being considered by the Senate.
It's no secret that 2009 is going to be a tough year for real estate, even out here on Outer Cape Cod. But, we've seen signs of improvement (e.g. lower inventory, great mortgage rates). That said, HGTV's Frontdoor.com recently published an article providing tips for buying and selling in 2009. It's not rocket science, but it serves as a good reminder of the extra steps (and opportunities?) that these difficult times provide.
The next graph shows current active single family homes in the context of the last 2 years. You'll see that inventory is decreasing. Time will tell us whether this is real or just a slow month in a normally slow season. It could be the beginning of a more balanced marketplace, caused in part, by renewed buying encouraged by the record low mortgage interest rates.
