At the beginning of the year (2010) it was predicted that once the Federal Reserve stopped propping up the mortgage industry at the end of March along with the end of the First Time Home Owners Tax Credits interest rates would raise considerably. What no one knew at the time this prediction was made was the coming fate of the Euro and how that would affect investments in the United States. It’s just one more indication that we truly live in a global society.
When Greece announced the current issues with debt and their inability to repay many in Europe turned to invest in US backed securities, which are considered a safe investment throughout the world. After Spain and Portugal announced that they too are having issues it has just exacerbated the Euro problem and pushed even that many more investors toward US backed securities, which in turn has kept interest rates below where they were expected to be at this time.
For the current buyer or refinance client this simply means that interest rates continue to be low, which makes it a great time to buy or refinance your home. For everyone it just shows us all that it is very hard to predict interest rates and other trend in an ever evolving global world.
Home sales were up 6% in January 2010 over the same period in 2009 with 1,033 home closings. Condominium sales were also up the first month of 2010 from last year. If you were a lucky buyer, you most likely got a better deal this year than you would have last year since the average median price in January was $159,000, down from $165,000 in January 2009. The condo medium price was $154,550; also down from $165,000 last year at this time. Another difference is the inventory numbers. They were up last year and are actually down over 275 and at the end of January there were 22,233 units on the market.
This is all very good news and it looks like the first time home buyer’s credit has worked during the past year and continues to work now. It’s really a very good time to purchase a home as prices are down, interest rates continue to hold at near historic lows and, as long as you have a house under contract by the end of April, there are government tax credits available to you whether you are a first time, a move up or move down buyer in the market. We don’t expect this “perfect storm” for buyers to last much longer so the time is now.
In reading over many recent publications it looks like the interest rates will be at their lowest during the first quarter of 2010. The Federal Reserve along with additional government programs that have helped keep interest rates low will be phased out over the next three months in hope that the private markets will come in and take over where they left off and this is what needs to happen to insure growth in the economy.
However, it is expected to be a bit bumpy since no one knows how much or exactly when the private markets will jump in and take up the slack. That means that interest rates may be (some say will be) rising throughout the remainder of 2010. Of course, since there are so many unknowns, no one can say for sure what will happen exactly. A few predict that the government will have to get involved again before it can totally let the markets go and we will all have to wait and see as the year progresses. The one thing everyone seems to agree on it that for those in the market to purchase a home; interest rates will be at their best in the next few months.
After weeks of getting ready for Christmas with the decorations, presents and all, it passes ever so quickly in only a day and a half. Now that it is over, if we are lucky, we get to continue visiting with family and friends, eat some additional good meals and relax before the start of another year.
Looking back on this time last year it was a time filled with fear of the future and the unknown wrapped up with promises of changes from a new president that would be sworn in by the end of January. No matter what your political affiliation, we seem to be at a better place this year than last. The economy isn’t exactly rocking along but it is much better than it was at this time last year. And though there are still many out of work, let’s all be hopeful that jobs will be the present for many in 2010.
I wish you all the best for the week remaining in 2009 and continued success and happiness throughout 2010! Let’s make it the best year ever!
When it comes to inflation, our economy seems to be on a schizophrenic thrill ride. Just last week it looked like inflation was picking up at the wholesale level so the mortgage market tanked in response. But inflation never appeared at the retail level so we gained all the losses back toward the end of the week and ended up right back where we started! So while interest rates have ticked up a bit due to the overall market, we are doing much better than it looked like we would be doing last week.
Many experts believe that the news from the Fed in regard to inflation and moving out of securing mortgage loans is a precursor to rates rising throughout 2010, making early 2010 a good bet for the lowest rates of the year. This coupled with the tax credits for both first time home buyers and those moving up in a house or downsizing makes early next year a great time to consider purchasing a home. Maybe the best Christmas present to yourself and your family is to buy a house. If you are waiting for a good deal to do so, this would be the time to get it!
Recently the head of the Federal Housing Administration went before congress with some recommended changes for qualifications to get a FHA loan as well as some guideline changes. While nothing will happen until congress votes on these changes, it is believed across the industry that some, if not all, of these changes will happen in some form or fashion. Since we cannot do anything but abide by the new changes, most people just want to know how it might affect them.
For sellers, it looks like the amount you can contribute will be reduced from 6% down to 3%. This means that buyers will have to cover more of their down payment and closing costs in the future and won’t be able to rely totally on seller concessions. It also looks like buyers might have to have up to 5% to put down on the home, which is 1.5% higher than is currently required. There are also some changes in the mortgage insurance and that will most likely raise MI both on the front end and monthly but I have been told that the monthly will be reasonable; we will see.
There are some other provisions that will affect the lenders as well so it will be very important going forward to have a lender that is FHA approved under the new guidelines. As always, if you need some additional information, please give me a call and I would be more than happy to answer any questions you might have or send you to someone who can. In the mean time, we will all have to wait and see what the final results on FHA will be.
