Mortgage Rates Hit Lowest Levels In Almost Forty Years
Just when the deals couldnt seem to be any sweeter for homebuyers
, the news out of Washington last week was that mortgage rates have now hit their lowest levels since 1971. The 30-year rate has dropped to 4.44% for the government backed group Freddie Mac. The 15-year rate slipped down to a staggering 3.92%. With numbers this low, it would confound just about anyone looking to sell homes why anyone would pass it up, or wait.
Playing the waiting game for one reason or another
People are playing the waiting game for one reason or another. For some, they are waiting for another government run incentive program to kick in, such as the new homebuyer tax credit. They believe that waiting for that eight-thousand dollar bonus is worth it. Others are reluctant to kick their name into the hat because perhaps their credit is in the tank or they dont have the equity, or they dont enough money for a down payment or are unsure about how the market will rebound or if it ever will.
These are all legitimate reasons and concerns for different people to have. And while it may be easy for those of us in the industry, with a stake in every sale of a home, we need to step back and remember just what causes different people to become nervous. Buying a home is still the most important investment in a persons or familys- life and as such, there is a long-term commitment and a great deal of stress when thinking about the long-term health of the economy.
There are millions of people currently out of work. Most of these people want to work but have been unable to land any meaningful employment. Taking that into account, there are many families who once subsisted on two incomes but are now squeaking by on just one. Perhaps before the economic meltdown these families were looking at the possibility, and plausibility, of being able to buy a home but these days are in the past.
Still others are clinging to a fear, whether rational or not, that their credit score will be too damaged from some economic disaster to even be considered for a mortgage. People dont want to waste their time, or anyone elses time for that matter, holding out hope that some lender somewhere will take into account their hardship and feel some sense of sympathy for them. They know too well that its never personal, its always about good business investment and banks and lenders are being more stingy with their funds these days than they have been in more than three decades.
What about the incentive-seekers?
Of course, this leads of to those potential homebuyers who are looking for the incentives to buy. They are usually products of the sale generation of the nineteen-nineties and the first part of this decade where, if they arent offered some cash back deal or special rebate, there is no reason to jump at the offer.
These are the people whom it is incumbent upon those of us in the industry to appeal to. With mortgage rates so low right now, the money that will be saved on an average home over thirty years will far outweigh any government incentive. In other words, those people waiting for the immediate handout should be directed to calculate the savings of getting a mortgage at 4.4% now as opposed to waiting for the uncertain offer of cash back from the government and signing at 5.4%, for example.
There are a number of buyers out there waiting this time around. These are the same people who were ready to buy in April but missed the deadline. If there has ever been an incentive to buy, 4.44% for a thirty year mortgage should be that incentive.
David
by: David Reinholtz
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