Wichita Homes for Sale-What Does Fed Rate Cut Mean?

Real Estate Agent with Realty Austin 0630202

Wichita Homes for Sale-What Does Fed Rate Cut Mean?

Sometimes I really wonder if anyone in Washington knows what is going on in REAL America....So today the Fed slashes interest rates 3/4 percent, which should be really good news right?   Is this going to get the housing market moving again?   I don't know if anyone cares what a Real Estate Agent in Wichita KS has to say about the issue but here are my thoughts....

 Basically what I see is that our local Wichita market is stalled because people are concerned about the economy and are holding onto their money.  Times are uncertain and no one feels it's time to make a big purchase.  A major financial decision like buying a Wichita home in times like these is not easy to do.  In order to give consumers confidence and motivation to buy again, we need 3 basic things-

*Low Interest Rates:   Well interest rates for home loans are already low-how about 5% for an FHA loan with only 3% down?   If you have great credit you can get a Wichita mortgage today at 4.625%.   These are HISTORIC lows- low, low, low.   And yet, Wichita Home Buyers are still not confident enough to pull the trigger and begin buying again.   It may take interest rates in the low 4's to jump start Buyers motivation.  

*Downpayment Assistance!   In a "typical" real estate market (before the credit crisis) homebuyers were able to have access to a few different types of downpayment assistance programs.   For example, Wichita Home Buyers used to be able to take advantage of Bond money assistance for FHA home loans that would eliminate the need to come up with cash for the downpayment.   I have found that some people who want to Buy a home in Wichita can qualify for the loan but are unable to come up with the downpayment.

 -I know you may be thinking isnt that what got us into this mess in the first place?   Partly it is, but the loans that got us into this mess were loans for 100% of the purchase price  and the Buyers had NO money in the transaction.   We also had refinance loans that granted borrowers up to 120% of the value of their home-making that homeowner upside down on the home, try selling your house for more than it's worth!  And then there were the adjustable rate mortgage loans that doubled and tripled mortgage payments plus the interest only loans that also added to the problem.  

I am humbly suggesting that those who want to purchase a home should be required to have their own money in the transaction but still need some assistance to become homeowners.    This was the purpose of Bond Money programs and it worked quite well until all the bond investors went away.   This is the reality of the world we live in.   First time homebuyers need assistance in purchasing that first home.

*Realistic yet Fiscally Responsible Lending!  Yes, we have a credit crisis!  Our lending institutions have gone from one extreme to another.   First throwing money at anyone who could breathe and now making good credit risks jump through ridiculous hoops to get a mortgage.   We are in a period of adjustment and we need to get back to middle ground-realistic yet fiscally responsible mortgage lending.  

 I ask that Washington lawmakers and the Fed lend an ear to Realtors across this country who are in the trenches and on the front line.   Would it be so difficult to talk to real Americans instead of lobbyists?   We may be able to brainstorm some solutions.   And to my fellow Realtors I would like to express how proud I am that we collectively have behaved professionally in the face of difficult times.  We are not crying for a handout from Congress, we are adjusting our business plans and our business activities and attempting to assist our clients in the face of a barrage of negativity from the media.

I do have hope that the new year will bring new solutions, possibly lower mortgage rates, realistic credit standards and downpayment assistance!

For More Information on the Fed Rate Cut check out GOOGLE

Comments (1)

Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Terrific analysis Laurie and your take on the Fed rate cut and other factors. A huge factor in housing demand is jobs. First off, having one, and secondly a good paying one. We are not going to see ourselves out of those woods real fast despite other stimulus ideas.

Dec 16, 2008 09:24 AM