Title

Interest rates are low, but they won’t always be. Remember that when you consider buying a home in Pinellas County

What single factor may splash cold water on the recovering housing market? According to a CNN/Fortune Magazine report, it could be interest rates.

“What’s that?” you say. “Interest rates are at historic lows. Interest rates seem to be the one single thing that we don’t have to worry about when we think about the housing market.”

Yup, you are correct.  But according to the report, rising interest rates could be looming. And if that comes true, it will retard the housing market recovery.

According to the report, there are a number of factors that should have favorable impacts on a better housing market – strong improvements in the rate of single-family housing starts, more construction permits being pulled, and an upward trend in home sales across the nation, to name just three.

And let’s not forget really, REALLY low interest rates.

But, according to the report, interest rates will inevitably rise. And when they do, mortgage costs will go up. And that will be an impediment to a market recovery.

Those historically low interest rates are around 4 percent right now. But the MEDIAN interest rate, looked at long-term, is more like 9 percent. The report says that when interest rates go up, as they inevitably will, the effect is likely to be like an anchor on the recovery of the housing market.

-0-

Something else that is probably inevitable – people saying, “Wow, I wish I had purchased a home in Dunedin or Palm Harbor when the prices and interest rates were really low.”

That doesn’t have to be you. Call or e-mail me now and we’ll discuss what you want to accomplish home-wise. I’m always available! beth@bethfrederick.com, or 727-643-7100.

Tags: Dunedin, home, interest rates, Oldsmar, Palm Harbor, pinellas county, purchase

Rates down, but down payments up for Pinellas County real estate (and real estate everywhere)

I’ve mentioned here a number of times how low mortgage interest rates are, and how they – along with the lowest home prices in at least a decade – make homes really affordable right now.

But to be fair, there is another side of the coin (isn’t there always?) which makes home-buying more of a challenge than it was in the rock-n-roll days.

I’m talking about down payments.

Home prices may be down, and interest rates may be at historic (or near-historic) levels, but the demand for more substantial down payments is up. It’s all part of the tougher underwriting standards; lenders want to see buyers begin the home buying process with a bigger personal stake in the transaction, and that means larger down payments.

Just a few years ago, it seemed like down payments were going to become a thing of the past. Nothing-down and little-down mortgages were all the rage, and you could buy expensive homes and finance them with big mortgages without having to come up with actual cash – or not much of it, anyway.

Great interest rates are available now, as I’ve written about in the past. But if you really want that rock-bottom rate, you’d better be ready to come up with a 20 percent down payment.  It’s still possible to get a mortgage and put less than 20 percent down, but the rates are going to be higher.

LendingTree came out with a report last week that listed state-by-state average down payments, and the average of all of them was 12.29 percent.

(I know you’re wondering what the average rate is for Pinellas County real estate. Actually, LendingTree didn’t get that fine on rates, but the company DID say what the average down payment is for the state of Florida: 13.16 percent.)

Fannie Mae and Freddie Mac want at least 10 per cent down.  If you want the very best rate, you’re going to have to also pay for private mortgage insurance – not part of the down payment, but an upfront cost you can’t avoid.

A Lending Tree spokesperson said, “The reality is when you put less than 20 percent down, you have to pay for some kind of insurance to protect the lender from the higher risk that you’ll default…but private mortgage insurers these days aren’t always willing to do business with low down payments.”

There is some speculation out there that if we are going to continue to have record low interest rates, the mortgage industry may increasingly move toward that 20 per cent down payments.

Tags: down payment, interest rates, pinellas county, Pinellas County real estate, real estate

Mortgage rates are lowest they’ve been in 38 years

Do you need another reason (besides the low prices and the big tax credit) to think about buying a new home? Okay, here it is: Mortgage rates came down again this week and are now at the lowest point IN THE PAST 38 YEARS!
Freddie Mac does a survey of mortgage rates every week, and this week’s survey shows that rates are at historic lows for 30-year fix rate mortgages.
The rates on 30-year (and 15-year) mortgages came down for the fifth week in a row, according to Freddie Mac. Rates on five-year adjustable rate mortgages came down to record levels a week earlier, and they stayed in that very low range during this most recent week.
Why the low rates? Well, demand for mortgages (and, of course, demand for housing) remains weak; also, foreclosures continue to be a factor.
The 30-year fixed-rate mortgage rate for the week was 4.71%, down from  4.78% during the previous week. A year ago, the average rate was 5.53%.

Tags: interest rates, pinellas

Buying a house in North Pinellas? Interest rates are DOWN again

This week the magic number is 4.78, the lowest in history. Last week it was 4.85, and THAT was the lowest in history, too.
What is it? Why, the interest rate on 30-year fixed-rate mortgages, of course.
Average rates on a 15-year, fixed-rate mortgage dropped to 4.52 percent; rates on five-year, adjustable-rate loans fell to 4.92 percent from 4.96 percent.
The Federal Reserve has been trying to do what it can to make homes more affordable. Its efforts have driven mortgage interest rates to their lowest point in the history of Freddie Mac, which dates back to 1971. The rates are a full percentage point lower than they were just one year ago.
The low rates mean that more homeowners are refinancing their home mortgages. The Mortgage Bankers Association keeps an index of mortgage applications, and that index showed a three percent increase in applications for the week ended March 27. The week before was even more dramatic – 30 percent. The Mortgage Bankers Association says that fully 80 percent of all those applications were for refinances.
Last month, the Federal Reserve announced it planned to buy $1.2 trillion in mortgage-backed securities as well as $300 billion in long-term government debt. All of that has forced interest rates lower.
I’m not sure I would call this a “down side,” but the other side of the coin is that lenders are tightening up their lending standards. So while rates are going lower, they are increasingly only available to people with spotless credit.

Tags: federal reserve, interest rates, north pinellas

Mortgage rates down, but bank profits up

Here’s a fact you may not have realized – interest rates on home mortgages have been coming down, but the profit margins for lenders on those mortgages have been going up.

What that means is that mortgages could come down even further, and lenders could still make a nice profit on them.

In January, the average rate on 30-year fixed mortgages fell below five percent. It was the first time that rates had dipped so low since Freddie Mac started keeping track of rates in 1971, 38 years ago.

In spite of that, bank profits on 30-year fixed mortgages have been going up. The gap between mortgage rates and 10-year U.S. Treasury yields (2.5 percent) hasn’t been so great in the past 27 years.

Enlightened home buyers aren’t very happy about that. Some officials in the federal government aren’t pleased, either. California Congresswoman Maxine Waters serves on the House Banking Committee. She believes lenders should drop their rates to benefit homebuyers.

“If the government is making sure that cost is dropping for the banks, it should be dropping just as much for consumers,” she said. “But they’re not. Banks could make loans at 4.5 percent, or even lower, and it would still be profitable.”

Some experts believe banks are reluctant to drop rates for consumers any further because of the losses they have experienced through foreclosures and a more than sluggish real estate market.

It will be interesting to see what the Obama Administration will do about home lending rates as a condition of the bailout.

Tags: interest rates