Mortgage Update from my friends at SouthView
The good news is that the efforts of the Federal Reserve and Treasury are beginning to show an effect and helped stabilize the banking industry. Most experts agree the rate cuts and stimuli will remain in place throughout most of the year. The bad news is that unemployment will continue to rise through the first half of the year - a major hindrance to overcoming the "fear factor" of potential homebuyers.
The fears should be overcome by two factors. First, as home prices fall and the actual cost of owning a home becomes less than renting (and we are already there in part of our market) - first time homebuyers will jump in. The credibility of Wall Street and the stock market continue to erode and the media will soon focus consumer attention on the reality of real estate now being a "safe" investment. That will stimulate both primary and second homebuyers and even some individual investors.
How will rates impact 2009? We know that rates are at all time lows and that real estate prices are also very attractive. The two factors could certainly help spark a real estate revival in 2009. We expect rates to hover in the 4.75% to 5.75% range through at least the first part of this year and then to slowly move back over 6% towards the end of the year - or when inflation again becomes a factor. We may never see rates this low again in our lifetime and probably won't want to because we know what induces them. Some may ask why many banks raised their rates when the Fed made their last cut. Quite simply, with all the staffing cuts lenders made last year, banks could not handle the refinance volume so that is how they handled demand. The same holds true with jumbo rates and commercial paper. Until lenders have a comfort level with the economy they really don't want large long term loans on single entities. We should continue to see competitive rates on 3 and 5 year fixed jumbo ARMS (5.25 – 6.0%) because investors can convert/sell those notes when economy changes. FHA and VA rates continue to remain in the 5.25 - 5.75% and remain the viable opportunity for those with limited funds or damaged credit. Low rates and home prices at 2004 levels preview a brighter year in 2009.
The Fed's latest actions have pushed down 30 Year fixed Mortgage rates to a range of just over 5%. Mortgages are available with no points, or pay 1/2 a point or so and watch the rate be substantially lower.
Contact SouthView Mortgage for more details: 239-963-1900.
Correspondent Mortgage Lender License #CL 100000021
Correspondent Mortgage Lender License #CL 100000021
Labels: Mortgage Update
posted by Nina Link @ 12:15 PM
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