Common sense tells us that Mortgage Interest rates cannot stay at their Historic low selves forever . . .
Nearly every professional in the industry cautions customers and clients against waiting to take action on their purchases because surely when rates do begin to rise, they will rise quickly and precipitate somewhat of a frenzy that will quickly erode buying power (Affordability of homes).
There are many Real Estate industry experts with a bit of egg on their faces having sung songs predicting an near and certain end to inexpensive financing.
I believe that we ARE now nearing the end of this low rate party.
I'm not writing this just for the sake of singing doom and gloom . . . Just facing a few realities.
Real Buyers can lock in today's rate with most Lenders for 120-180 days with relatively marginal rate premiums. This softens the potential blow when rates do rise . . . and afford Buyers the opportunity to "Buy Time"
The trick is that you don't get to lock in til you've a contract on a purchase . . .
and many Buyers in Today's market also need to sell their existing home.
Sellers have been reluctant to accept "contingent on sale" contracts - Rightfully so by my judgment.
So . . . my rationale is that rates will likely only go one direction from here . . . UP!
and
I believe that in most markets the values have already taken most of their hit.
Strike while the iron's hot.
If you're one of those "SMART" people who has been watching the market and shopping and have identified 3 or 4 properties that you'd love to buy, I think NOW is a great time to negotiate a great deal and build in enough time to sell your existing home (a 4-6 month contract).
At a minimum, this strategy gets you through the first hurdle of knowing what your financing is going to look like and cues you up to perform.
For a little plain speak about what the Federal Reserve has done (and continues to do) . . . and why I believe that the party of low rates is nearing its end . . .
Below is an excerpt from the December 7 edition of "Mortgage Matters . . ."
"The Federal Reserve and Mortgage Rates
There is another reason why we think saying "I told you so" is a bad idea: It can be thrown back in your face. For the past few months we've been forwarding an argument for rising mortgage rates, and yet they keep moving down. Should we toss in the towel? Not yet. We still think rates are destined to move up. The relationship between the Federal Reserve and the mortgage market might help explain why.
The Federal Reserve has done everything in its power to push mortgage rates down to record lows over the past year, and it has succeeded primarily by purchasing an unprecedented $1.5 trillion worth of mortgage-backed securities. This Fed-created demand has helped drive down mortgage rates. Some economists believe the Fed's purchases have resulted in a full percentage point drop in rates.
But the purchases won't go on forever. Last week the Fed stated that it would begin testing a strategy to shrink its portfolio of mortgage-backed securities. One variant is to taper off its purchases of mortgage backed securities. If that is indeed the case, the wheels toward higher rates will start turning.
We don't expect mortgage rates to spike, as any move will be gradual, but it's worth noting that as private operatives move in to fill the void, their objectives will differ from the Fed's: Their objective won't be to drive down mortgage rates, it will be to make money."
I'm just sayin'
Best,
b
Barry Owen
Principal Real Estate Broker
Keller Williams Realty
30 Burton Hills Blvd Suite 175
Nashville, TN 37215 - Green Hills
Call me: 615-568-2123
Text me: http://www.mycricket.com/sendtextmessage/ 6155682123
email me: barryowen@kw.com
Visit The Owen Group http://www.theowengroup.net
http://www.owengroupnashvillehomes.com
Barry Owen's Internet Portal to all blogsites, websites, and social networks
http://tnrealestatetribalhub.wordpress.com/2009/06/02/barry-owens-web-portal/
Simply & BOLDLY Living the FourFold Way in Open Space!
Quintessentially connected to the real estate industry to offer the ultimate experience for Home Buyers and Sellers in Middle Tennessee . . . Inquire within!
;)
;)
;)
As the TV show Monksays to Natalie, "These are desparate times!" :)