More evidence of a buyers’ market
For everyone looking for some good news to finally come out of the residential real estate industry, here, at least, is a bit: Mortgage interest rates have sunk to a two-year low.
This is good news for anyone interested in buying a home. Lower mortgage interest rates equal lower monthly mortgage payments.
The interest rate on 30-year fixed-rate loans dropped to 5.96 percent from 6.10 percent last week. That’s the lowest this rate has been since September of 2005.
Rates on 15-year fixed-rate mortgages fell last week, too, dropping from 5.73 percent to 5.65 percent.
Again, this only proves that if you are interested in buying a home, this is a great time to act. Housing prices are stagnant. Sellers are willing to negotiate on everything from sales price to home repairs. Now interest rates have dropped. What other evidence do you need? This truly is a great buyers’ market.
Tags: 15-year-fixed-rate-loans, 30-year-fixed-rate-loans, mortgage-interest-ratesRelated Stories
POSTED IN: Breaking News, Buying a Property, Insights and Commentaries, Mortgage
5 opinions for More evidence of a buyers’ market
Briane McLoone
Dec 9, 2007 at 4:01 pm
Minimal movements in mortgage interest rates will not make this a “buyers’ market” because sellers, while dealing with precipitous drops in price still have large equity amounts after a prolonged residential real estate “run-up”.
The “motivated” (read “desperate”) seller has likely already left the arena via foreclosure, down-sized or may be a renter. Savvy buyers know the bottom has not been reached. It is true that “pigs never get rich” but one need not be a rocket scientist (and don’t even mention a realtor) to know that this correction has miles to go.
The seller is waiting for 2004 prices to return, the buyer is waiting for 1996 prices…and the market sleeps…and will remain sleeping until a price level is reached that either signals the buyer that the bottom is near or the potential seller sees the end of his equity approaching quickly.
Mortgage rates have been moving sideways in any meaningful way for almost a decade. Price has been the engine of commerce in real estate, not interest rate. An 8th of a point one way or the other in the interest rate will not awake an insomniac; much less the moribund buyers and sellers, diverse though their intent may be.
kevin
Dec 10, 2007 at 12:49 pm
Right now I have been shopping and in a place that is essentially a dying market I have the pick of the litter.
Dan
Dec 10, 2007 at 1:12 pm
Thanks, Kevin and Brianne, for your comments. I agree that mortgage-interest rates don’t really motivate someone to buy. But I do think this is a great buyers’ market. (Of course, if you do have your own home to sell, too, than being in a buyers’ market isn’t much help.)
Briane McLoone
Dec 10, 2007 at 5:44 pm
More and more “encouraging” news just pours in. The median price index for single family homes fell for the first time in 40 years. That should make everyone feel warm and fuzzy for the holidays.
This correction is long overdue and is causing great discomfort among sellers and folks just trying to meet payments on “clever” financing cooked up by mortgage brokers.
The first time buyer has nothing to lose by waiting while any other buyer is also a seller and suffers as well.
As an appraiser, it’s apparent that many owners are reaching for their equity “cookie jar” and finding it rather empty.
The only good news in real estate is that December is a lousy month anyway.
Dan
Dec 11, 2007 at 8:40 am
Hi, Briane:
Your post hits a nerve. When my wife and I met with a mortgage loan officer about two years ago — before we bought our current house — he constantly pushed for an interest-only loan. He predicted that when it came time for our loan to adjust, I believe it would have been seven years later, the odds would be good that mortgage interest rates would again be low.
Of course, I have no idea what interest rates will be like in seven years. But I also knew I didn’t want to gamble. We went with a standard fixed-rate mortgage instead.
After meeting with the loan officer, who managed to make an interest-only loan sound so reasonable, I can see why so many other borrowers did take out riskier loan products. We turn to mortgage loan officers as experts. We expect them to give us the best advice possible. Often, they do. But other times their advice seems self-serving or just plain incorrect.
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