I Think Were Going To See 5.25% 30 Year Mortgage Rates This Week!

This maybe going out on a limb HOWEVER watching the bond markets and talking with a couple lenders who are very familiar with the interest rate marketplace I think in Tucson we will be seeing 5.25% 30 year mortgage rates this week! I did a post last week about how good 5.5% is and to see 5.25% is incredible, and honestly that is as cheap as I can envision things getting. Now the official word is not out but I would expect that mortgage lenders will be re-pricing their rates this afternoon and tomorrow to show a 30 year fixed loan with no points at 5.25%. If you wanted to get this rate even cheaper you could pay points however with rates already being so low the amount you would need to spend to reduce the interest rate to make a difference I don’t think makes economic sense.

Hopefully this is the demand side incentive that will push a lot of buyers into the real estate market. At 5.25% mortgages are so affordable that it will; when put in dollars and cents show buyers how affordable their first home or a bigger home can be. I don’t necessarily think this one factor (low interest rates) is going to change the real estate market here in Tucson overnight but it will certainly make things more affordable for everyone. If you have a current mortgage I would highly suggest you look into refinancing it at the current rates. I was working it out for a client and on there 300k home lowing the interest rate from their current 6.5% to today’s 5.5% (I personally think that will be 5.25% within 24 hours) would save them $200 per month every month for 30 years. That’s a lot of savings…..

On the other side of the fence if you’re a seller and maybe you’re close to the market but just not selling yet, this rapid reduction in interest rates should be very beneficial to you. It should push more buyers into the market and also as a by product make your home more affordable to them. (**In Theory)The added demand should purchase all the lower priced (better value) homes and push more buyers through your home as your home now becomes that much more attractive. From that point you may receive offers and even a sale. This is how these low rates translate into heating up the market. Most people remember after 2001 interest rates (including mortgage rates) got very low igniting a powerful push for everyone to buy real estate, now as we have seen things got way, way overdone there and eventually the market turned into a pure speculation “lottery” as to who would get rich off real estate and who wouldn’t. This “lever” is being pulled again to get the real estate markets across the country out of the serious depression most have entered. I would include Tucson in this description since prices have fallen roughly 40% from top to the current bottom. While not as bad as other western cities IE: Phoenix, Las Vegas, Sacramento, and San Diego the market here has gotten weak due to the oversupply of homes and limited demand (buyers) willing or able to step up and make a home purchase.

This entry was posted on Monday, December 1st, 2008 at 12:38 pm and is filed under Financing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.