I keep looking at rates and thinking "WOW!"
I wasn't really sure if we would see rates this low, but I think it is officially the lowest I have ever seen in the past 20+ years. In 2003 we had rates at similar levels, about .25% or so higher, and we were calling them 40 year lows. So I think it is safe to say it is a 45 or 50 year low in rates. (Records don't go back much farther than that, but my own personal experience in the industry goes back to 1987)
Here are some interesting numbers:
- The average rate for a 30 year mortgage over the past 20 years: 7.68% That is a rate that includes paying points.
- When I purchased my first house in 1989 my discounted "mortgage guy" rate was 11.25%.
- The first time I refinanced that house was to a 5 year balloon at 9.25%
- Second refi: another 5 year balloon 7.25% (both refi's were early 90's) I was only in this house for 5 years, and had 3 loans, saving quite a bit with each refi.
The real world examples of what I was actually able to do as a Mortgage Guy, jumping on a rate when it made sense. We have it so good right now that it is hard for people to understand just how good we do have it.
Today: flirting around the 5% mark, and the occasional dip below 5, and well into the 4's if you pay a point or so. Of course this would be for a highly qualified buyer/borrower with great credit. But:You don't need a huge down payment or be perfect to take advantage. FHA buyers get the same rate, and can get away with as little as 3.5% down and Good credit is expected, but it does not have to be stellar credit.
Why are they so low? partially because the economic data is weak, and bad news is good news for the credit markets... causing rates to go down. Rates go down to help spur the economy. The next piece is that the Federal Reserve along with the Treasury have committed to buying $500 BILLION in Mortgage backed securities to help keep mortgage rates low, and to help stabilize and boost housing prices.
Interest rates have WAY more upside potential than down and we will not know where the bottom is until they start going up. My feeling is that we will flirt around current levels for the next 90-120 days and then the economic stimulus plans should begin to kick in, spurring the economy. Good news is bad news for interest rates, so the first sign of us coming out of this recession will lead to higher long term rates, and it will most likely be a quick jump up, not a slow and gradual one.
We will probably look back at the last few months of 2008 and the first few months of this year and reminisce, "I could have purchased that house for $X00,000, and had a 5% interest rate, I wish I took advantage!"
We are in a great time to take advantage of House Prices AND interest rates all at the same time. If you plan on buying and keeping your home for the long run, I don't think you will ever regret taking advantage of today's market. However, if you think you will move in a year or so... It may not be the best move. Real Estate is a long term investment, and history has proven that.
Have a great week!
Rob
(732)223-1630 x102
Real Estate Mortgage Network
NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey
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