Are Rates Going to Go Lower? The Treasury Department Has an Idea You Need to Hear About
A recent survey by The Mortgage Bankers Association stated that 10% of mortgages on one- to four-family homes were at least a month overdue or in the midst of the foreclosure process during the third quarter of this year. That is up from 9.2% three months earlier and 7.3% a year ago. Wow! Inventory is already high, and an increase in foreclosures does not smell very good. So, what’s a county to do to boost the real estate industry, the lifeblood of the economy? How ’bout a bailout? The Treasury Department is in the beginning stages of a deal that would help reduce interest rates for new loans to purchase a home. The number that’s being thrown around is roughly 4.5%. The hope is that this new low rate will boost sales, help stunt the slipping national home prices, and enable homeowners to “buy up” and afford larger loans.
So, how good is a 4.5% rate? Check out the 30-Year FRM graph representing rates from 1971 to present day at www.mortgage-x.com/trends.htm just to see how good it can get and just as important, how good it is currently! If you haven’t noticed rates right now, we are hovering just above 5%, which is still historically low even without the Treasury Department’s proposal. Love the mortgage-x.com site, by the way.
I have previously talked about the refinancing opportunity out there right now. I would highly recommend you talking to a lender if you are in above 6% on a fixed OR adjustable rate mortgage AND plan to stay in your current home for at least the next 3 years. Just how much do I believe that? I am closing on the 22nd of December on my own personal refinance! It’s important to note that the proposed Treasury Department plan will most likely not apply to those applying for a refinance. This new deal is exclusively for new home purchases, and if it is successful it should inject some new life into the national real estate picture.
