Mortgage rates continue to conquer new territory with a new all time low for a 30 year fixed mortgage! What an amazing time to purchase or refinance. I know there are many people who would love to take advantage of these rates, but they are not in the position to make any moves. What good is the lowest interest rates on record when the financing rules are too tight? Rates could bottom out at 1%, but if people can't qualify, then it is all in vain.
Fortunately FHA buyers are able to take advantage of these historically low rates. However, in our Salem Oregon market, those buyers only make up 20% of the purchasing power. It is the more qualified purchaser that is having difficulty with financing and therefore is less of a driving force in getting us out of the housing crash. FHA buyers have helped stabilize the market below $150,000 in our Salem Oregon area. Homes priced above that price point continue to see values erode away quickly. Unfortunately there is too much inventory in the higher price point.
It is so overwhelming to think about how our economic system is all tied together with different facets of the economy. What is going to break it open? Housing has historically lead the road to recovery in the past recessions, but how is housing going to recover when jobs are not created? How is housing going to recover when we have so many homeowners underwater on their mortgages and banks are not modifying? How is housing going to recover when we have such a mess with MERS and the overwhelming presence of Shadow Inventory?
There is no one answer to get us out of this mess. Declining mortgage rates are not going to make a bit of difference at the moment. We need solid fiscally conservative leadership on a wide and consistent basis to have a chance. The question is, have we dug our hole way too deep to recover well in the next decade? Judging by the way things are going, the answer seems grim, however; if you can take advantage of the all time low mortgage rates, then by all means; CAPITALIZE!