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Bruce McCoy
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Spinning Like A Top
What an exciting time to be in the home mortgage business! As it has been said about the weather in our area, “Don’t like it now, just wait 10 minutes, it will change!” The same can be said about the interest rates and the various rules that are used.
When the government announced a bailout of Fannie and Freddie, we saw an immediate drop in interest rates of a half point. The consensus opinion at the time was that rates would continue to drop to the low to mid-5s. That didn’t happen. The rates have crept up over the last week to the low 6’s at 0 points.
Once the hearings are concluded and (another) bailout plan for the rest of the banks and Wall Street is approved, I expect mortgage rates to drop back down again. Let’s all keep our fingers crossed that the people who got us into this fiasco also have an idea on how to get us out. I am encouraged by the hearings so far because there are a lot of smart people asking a lot of good questions. I think that whatever the plan is that does emerge will be the best way forward for all concerned. Where is this all heading? I don’t know, but as the old saw goes “Be fearful when people are greedy, greedy when people are fearful; the time to buy is when there is blood in the street.” I don’t know if this is the bottom or near it; but, as I said last month, sales are picking up and inventory (homes for sale) is declining. Is it now time to get a little greedy?
Mortgage Rates for Conforming Loans (under $417,000) as of 9/24/08 are:
(Rates quoted are for 0 point loans, for loans between $417,000 and $729,000 add ¾ point in fee)
30 year fixed: 6.25% (APR 6.32%) payments are $2,567.54/mo.
15 year fixed: 6% (APR 6.12%) payments are $3,518.88/mo.