Real Estate Blog - Mortage Rates Are Coming Down and Home Sales Are Likely To Increase

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Mortage Rates Are Coming Down and Home Sales Are Likely To Increase

IStock_000003057506XSmall Mortgage Application with House At least this has been the identifying cycles of years past. Will it work again this time with so much pressure on housing prices brought on by the collapsing financial markets? It is a question everyone seems to have an opinion on and those opinions are as varied as are the shades of white paint.

Rates are now well below 6% for all conforming loans and under 6.75% for Jumbo loans. The loan limit amounts in the conforming categories may be about to change upward making the costs at least on a monthly payment basis, less. While the rates do not reflect the add-on of points and certain lending charges, with these lower rates will Buyers and Investors move off the side lines and jump back into the market?

My prediction is that they will and with the amount of deferred demand, we could see some drastic numbers reflecting increased sales in many of the markets across the US.

The one caveat that must also be factored in is the increased difficulty in acquiring these loans. With tighter guidelines in play and the new more stringent guidelines for qualifying, the big increase in the numbers of sales may still be ways off unless and until investors supplying the money for these loans feel more confident in the general economy and lenders make the process a bit easier for qualified Buyer to buy.

Posted by San Diego Real Estate Voice authored by William Johnson GRI CRS e-Pro CDPE on 01/26/2008 02:05 PM

Comments (20)

20 Comments on Mortage Rates Are Coming Down and Home Sales Are Likely To Increase

JAN

2008

William...I think the movement in the Lending arena is but the tip of the iceberg. That is where the real challenge will be.

Hey Joan, I am sure you are right on that point. And it will get very interesting as the Fed rates continue to be dropped and if the mortgage market can catch a break with the bond yields. My prediction is that there may be a good chance to see 5% rates by late spring or early summer. What I also predict is that they won't last too long so I hope Buyers will jump in soon enough to benefit. The usual effect of really low rates is that there is an uptick in pricing, so catching the market lows and the mortgage rate lows at the same time is going to require buyers to play very close attention. The two will not remain side by side for but a blip in time.

When I told a few local agents about this, they asked what I was smoking, so I know that my prediction is not so in line with mainline thinking. But I think I also mentioned to you that I am real optimist and what's really funny is that I am often right.

William, I have clients who were approved at 6.2% just yesterday and they were ecstatic! Earlier in the fall they were quoted rate of 7.1% and decided to wait and are very glad they did.

i've got a feeling. lower rates with lower prices, throw in the gulf, fihing, golf and incredible weather and someting has to give.

it's not will it, it's when.

William, I really agree with your caveat.. You hit the nail on the head. I really see as the price of money decreases I really see in the next 6 -12 months more and more of the Sub - Prime/ Alt A lenders coming back.. However with more stricter guidelines. Right now even loans that make sense still can't get approved. (at least in Florida)

William~I knew that as soon as I clicked on your blog you would have some optimism to share. I have felt as though this year is going to bring so many fantastic changes for many and this being one of them. With the mortgage rates dropping, that will give our buyers the much needed comfort that they are searching for. Thank YOU my friend for sharing this wonderful post with us.

Hi Linda, I would guess within a week or two, that they would do even better. Even if they lock their rate, if the rates actually do come down further, most lenders would honor the lower rates.

Hi Jay, I surely hope you are right. But as we all know, nothing that sounds that good will last long very long. If nothing more than the usual greed, the time act is now while the opportunities are plentiful.

Mathew, We are experiencing this now here in California. I am though very optimistic that the right strings will be pulled ( lenders will be more realistic in their criteria demands and the right results will be forthcoming( more closings ahead ).

Hi Julie, I am the Eternal Optomist and sounds like you are too. If we create all this good energy, wonderful things are in store. I Believe.

William, I agree...been busy all weekend. True, credit reports must be better but that is a good thing. Happy Spring!!

I have seen an increase in my business this week. It is exciting.

William, We might have to go back to 60-90 day escrow days!!1

JAN

2008

Last week the mortgage folks in my life were lighting up the phones calling my past customers, offering them over 1 percent reductions in rate. It was down to 5% at one point, I think it was Wednesday morning.

Hi Missy, I am really beginning to see evidence of the increase in traffic alrerdy and also the attitude is changing to one of "this might be the right time" as opposed to "lets wait and see if prices come down more".

Hi Cassie, Me too, this past couple weeks has really changed and it is all good. Hang in there , I think it will be an awesome year!

Hi Mana, maybe 60 but more than likely it is will stay with 30 and 45 day. At least that would be my perspective. What will change for us in CA though is the 17 day defaults will likely be increased as it is taking lenders linger and longer to get things done. The underwriting is the snag and they are demanding more and more of a paper trail on the Buyers.

Hi Jeff, Right now with all the volatility, they are going back and forth. I think there will be calming down soon an things will stabilize. Lower rates are in our future though and Buyers will be responding accordingly. lender though will have a harder time as there will also be tons of refi's and they love those because they are easier.

JAN

2008

Yep - they can build the costs into the loan balance so it's a no-money situation for the homeowner. I think many folks will benefit if they stay on top of the rates in the coming months.

Good morning Jeff, Being an optimist, I am excited. I am excited about the possibilities that lay ahead in our industry and that homeowners and Buyers can hopefully have a more satisfying experience in home ownership than to constantly living in fear of markets collapsing. I am hopeful that the turnaround will be very beneficial and that most people will be able to realize that we must do things for the right reasons and if that is done, all will be fine.

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