Seattle Mortgage Reel Weekly KickOff, August 28, 2009
The housing sector is still showing life as the numbers came in better than expected. 433,000 over the expected 390,000 homes sold in July. Housing inventory now stands at a 7.5 month supply down from the previous report of an 8.8 month supply. However this could be too soon to say recovery is really in play. Contributing to the improvement is the $8,000 tax credit for first time home buyers. Also strategy is in play for many home buyers who recognize the opportunity to take advantage of low interest rates, many of these buyers moved up plans and not wait until 2010. This could affect the first two quarters in the housing numbers moving into 2010, which could appear that housing slowed once again.
Once again we have to enforce to all first time home buyers that the sale is soon to come to an end. November 30, 2009 will be the end of the $8,000 first time home buyer tax credit. A first time home buyer is defined as any person who has not had home ownership in the last three years. This came as a surprise to one of our clients who was not expecting the credit to be available to them.
Treasuries and Bond auctions continue to have a impact on Mortgage Rates on an intraday basis. A pattern that the short term treasuries have shown that foreign investors are purchasing over 40% of the auctions. However in the longer term bonds there has not been as much foreign investment as they may be hesitant because of the future of inflation risks which would tie them into a longer term instrument that is not yielding current market rates.
This translates directly to home mortgage interest rates. As yields climb so to interest rates. Current and future home owners have to keep this in mind when making a decision weather to refinance or purchase now over waiting until 2010.
Mortgage rates have been ranging from 5.00% to 5.25% over the past week. The floor or better known in the mortgage world as the level of resistance has been 5.00%. Each time rates attempt to pressure lower they have bounced in the opposite direction moving higher. We have had many fans of the www.themortgagereel.com ask if rates will once again drop one more time. The only insight that we can provide which would cause rates to move lower is the possible “double dip recession.” Many economists refer to the current economic cycle as a “W” pattern. This would show our economy at its peak then crashing during the mortgage melt down and financial crisis. Signs of improvement with the stimulus provided by the government and then a second pull back. This pull back is the highly debated on a daily basis. Should it occur investors will look to bonds as a safe haven, past trends show when a massive exodus from stocks occur bonds benefit, directly resulting in lower yields, lower yields translating to lower rates for home owners.
We would not bank on this happening, if it does great for the gamblers out there, but what if it does not and rates continue a slow increase. Are you willing to take that chance with your largest investment and debt? We encourage everyone to be proactive at this point, don’t get into a loan with a pre-payment penalty, if rates fall you can refinance once again. At least limit the exposure you have for higher rates and increase your cash flow for the future.
We will continue to keep you updated. Are you looking for a true mortgage professional? How can we be of service? Local licensed loan originators in Washington with over 17 years of financial experience.