Clark Howard recently stated that we are now seeing the lowest mortgage rates that we will ever see in our lifetime! And he is right. In August, mortgage rates dropped below the lows of November 2010. On Tuesday, August 23, The Freddie Mac Primary Mortgage Market Survey reported that the 30-year fixed rate averaged 4.15% which was down from the previous week average of 4.32%. On August 9, the Fed also announced that the federal funds rate would remain near zero through at least the middle of 2013. That is the rate that banks use to borrow funds which helps ensure that general lending rates will remain low for an extended period. But remember, that the federal funds rate and mortgage rates are different. Yes, this will help have influence on keeping mortgage rates low. But there are other economic and legislative factors to watch.
For example, the pending financial reform legislation is expected to add additional fees and capital requirements to mortgage providers. The only way they can adjust is to increase rates to offset those higher costs. The pending Qualified Residential Mortgage legislation also proposes increasing the down payment requirement to a minimum of 20%. After Labor Day, Congress will be back in session and these issues will be political hot potatoes.
Our Atlanta real estate market continues to be very active. In July, SmartNumbers (Marietta GA) reports that the market was up 25.6% in closings versus July of 2010. Are you or someone you know considering buying or investing? We have an unprecedented situation right now – the Atlanta market has incredibly low housing prices coupled with the lowest mortgage rates in our lifetimes. But this will not last forever. Remember in 2009 when the Dow Jones index was 6,600? Remember, when Apple or Google stock was really cheap? Wealthy people make money from buying low and selling high. Ten years from now, many will look back and see the “missed opportunity” to have bought real estate while prices and financing were low.
It goes back to what I said over 2 years ago, if you are straddling the fence....
NOW is the time to take action before rates go up and housing prices begin to rebound!