Mortgage Rates decline as Housing Prices begin to moderate is some areas

By Michael Mapes, The Responsible Mortgage Lender

During most of 2007 two inevitable things have happened.  One foreclosures have risen has home owners could not keep up the rising costs of housing as their adjustable rate mortgages have reset.  Secondly, this factor among others has led to a decline in the average home price in just about every market in the country.

The Credit Crunch and Liquidity issues experienced in August and September have yet to show up in the economic data released in October.  However, the Federal Reserve Board headed by Ben Bernanke saw signs that the economy was going to fracture and that the stability of the US Financial System was at risk.  Their direct response was to lower the discount rate by .50 bps in August followed by a lowering of the Fed Funds Rate in September and October.  The direct result of this is a lowering of interest rates for things like credit cards, home equity loans and to a smaller extent home mortgage.

During the summer months interest rates on home mortgages climbed to as high as 7.25% for a 30 year fixed rate loan.  Now that the investors appetite for prime loans has returned (mostly due to the FEDs action) mortgage rates are now approaching the 6.0% level again.  This lowering of the mortgage rates is beginning to stimulate the home buyers back into the market.  With rates still low and the rest of the economy steaming along home buyers are finding tremendous value in the market place.  In most cases sellers are willing to not only pay closing costs for the buyers but in some cases they are will to improve the property as well. 

As we move into the winter months and the home buying season of 2008 there are still cause for concern but if you are looking at buying a home a trusted realtor can show the value in buying a home at today's price levels.

Michael Mapes can be reached at 757.599.1810 ext 225 or on the web at http://www.theresponsiblemortgagelender.com/