Guest Author: 

Bob Chiodo

                                      Equity Home Mortgage, LLC

                                      bobchiodo@equityhome.com

*Rates:

  • 30 yr conforming=6.375
  • 30 yr jumbo=6.625  (to $600k)
  • 7/1 jumbo=5.750  (to $650k)
  • OR VA=5.500
  • State Bond FHA=5.750

I have – all of the markets have – been discussing inflationary pressures for most of this year. It’s funny that, although everyone knows that inflation is an issue, it seems to all of sudden cause the interest rate markets to bolt. Last Wednesday the CPI numbers came in higher than expected and we saw rates move higher for the rest of week. There is talk again of the Fed moving rates up to stop the inflationary pressures. Many economists are still thinking that inflation is temporary….oil has dropped 13% over the last two weeks and global demand is slowing. The credit crisis hasn’t resolved itself and the US housing market isn’t any better. Most of us are hoping that the Fed just holds steady until things look a little better.

 

The stock market did better last week and that also pressured rates. When the stock market improves, we often see investors selling bond holdings (causing rates to increase) and buying equities.

 

Honestly, from all I read and research, I can tell that no one knows where rates are heading. Many are thinking up, some are thinking down. We’ll see what happens but 6.50% is still good. It was only 7 years ago that mortgage rates dropped below 7%. Low down payment loans with mortgage insurance are very close to 7% now. Besides, with the tax deductible feature, a borrower in a marginal bracket of 35% is only paying 4.3% after taxes. That is still cheap money.

 

Take a look at this clip from a research report I read yesterday:

“Next year there will be 2.3 million weddings in the US, at an average cost of $30,000. That is $72 billion on weddings. And many of those new families start with the need to find a place to live, furnish a home, and build their nest.”

“Last year a record 4.3 million babies were born in the US. Each of them will need all sorts of “stuff” – food, education, and places to live – in (hopefully) 20-25 years.”

Obviously, the babies don’t need their own home but you can be sure that many of the families will be looking for larger homes. Just these numbers alone show that there is always a large demand for purchasing a new home. And that’s not counting divorces. I don’t have any stats on that but I met with three separate clients last week who were in the planning stages of separating. There is no question that, even with the difficult market, our services as Realtors and lenders will always be needed.

Thanks and have a great week!

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries.  They are not meant to be a quote for an individual situation.  Rates change daily and those above are only listed to assist market participants by keeping them informed for current interest rates.  Quotes are usually shown for a 30-day lock period and a 1% origination or discount fee.

 

(For more local and national real estate news, click on my monthly newsletter – JUNG’S JOURNAL – on my website www.bettyjung.com).