In the previous norm, when I asked a mortgage lender what the current rates were and where are we going, they would turn to the 10 year treasury bond. While not exact, it certainly did move in tandem, traditionally with a spread or difference in rate of about 1.75  So, if the 10 year treasury was trading with a yield of 4.5% then mortgage rates would be at about 6.25%. With the Fed's announcement several weeks ago that they would be purchasing 1.15 trillion in mortgage backed securities, treasuries moved down below 2.5%. The thought being that President Obama might get that 4.0% after all. But rates have been very sluggish in moving down. In fact the treasuries have moved much faster back up. Treasuries now on either side of 3.0%.

Are you still with me :) So, if we apply a traditional spread principal which says that investors would want at least 1.75% more for the risk of a homeowner defaulting on the debt versus the US government (when you think about it, is that enough of a spread?). With 3.0% treasuries, have we hit bottom in mortgage rates? The more debt the US issues the higher the risk and therefore the higher the yield should be, so naturally mortgage rates would follow in lock step if not race ahead. After all mortgages have to be riskier, right?

I could foresee a complete government intervention in the mortgage market, setting rates artificially low to reach the magic 4% number. But, it doesn't seem like that is currently in the cards and market forces have to take hold soon. So for those of you waiting for the 4%, is it worth the risk?

Ray Williamson

General Manager - Dream Living Realty

(919) 569-5989

 

Another Builder Home Trade Complete
04/28/2009
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We did it again! Reward Builders and Dream Living Realty have made another family's dreams come true in Cary, NC. Our latest clients "traded" their home in the Park at Westlake community for one of Reward Builder's new homes in Highcroft Village… more
New Website Launch - Dream Living Realty
01/09/2009
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Bear with me, as I spread a little propaganda here. With the launch of Dream Living Realty we are also launching two new websites. The first is now live and already providing over 350 people with exceptional experience searching homes on the local… more
Living the Dream!
01/07/2009
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We have launched Dream Living Realty! Ok we did it a month ago, but as is evidenced by the business and not getting to the blog, it has been a very successful launch. That's right, Jamie Dawson, Ginger Wilson and I have launched Dream Living… more
Bank Owned Opportunity
10/30/2008
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What a Deal-THOUSANDS! below Tax Value 906 Estelle CourtDurham, NC 27704 Type: Single Family Home Beds: 3 Baths: 2. 5 Sq. Ft. : 1475 Price: $119, 900 Find more… more
Mortgage Brokers, Bankers and the Big Four
10/29/2008
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And to think I was worried that only the JPMorgan's and Bank of America's would survive. But now the government has decided that banks are a good investment and chosen some regional banks including my bank BB&T. How comforting! So, as Realtors… more
Perhaps I'm cheating!
10/28/2008
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I really hope people don't think I'm cheating on today's blog post, but I do truly believe that this new listing is an example of how good people are able to live in the Raleigh/Durham area of North Carolina. The owners of this home could only dream… more
Rates Low, Prices Faling - Buy? Maybe
10/24/2008
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Is now the time to buy? I say maybe. Sure rates are low and they are certainly moving lower, that's a good reason to buy. Prices have come off their highs but are likely going to continue moving lower, maybe not the best buy indicator. But, here's… more
MagicJack - great leverage
10/23/2008
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One of the most important things that I ever learned in school was leverage. Not the excessive leverage of capital like what we have seen cause devastation to many companies recently. No, I mean the simple definition of leverage, specifically using… more
and so it begins again…
10/22/2008
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No I have not blogged before, but was quickly reminded of the principle I used to teach "Save Often". After posting what I thought was a fairly witty introduction to the blogging world, I navigated to another page and lost all my work! I had even… more
 

Ray Williamson

Raleigh, NC

More about me…

Dream Living Realty

Address: 4800 Six Forks Rd, Suite 120, Raleigh, NC, 27609

Office Phone: (919) 569-5989

Email Me

A glimpse into the Raleigh Real Estate market with the occassional sneak behind the scenes to see how a small Real Estate company grows in a shrinking market!


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