Rates remain low through latest storm

Rates remain low through latest storm

As the chaos continues in financial markets, 30 year fixed rates mortgages have remained in the high five - low six percent range. Last week during the market's wild roller coaster ride, the ten year treasury note, which mortgage rates tend to ride on top of, ended up only slightly higher than it began the week. So it's still not too late to purchase that new home, at a greatly reduced price, and finance it with a low, fixed rate. You will have to actually qualify for the mortgage, but hey, people did that for many years before "just sign and drive" mortgage financing became popular.

It is hard to believe that this entire financial sector meltdown was triggered by the collapse of real estate prices, but that is the one single factor that not only started this slow motion train wreck but is also keeping it going. Back in the day when real estate prices seemed to only go up, many people made fortunes, big and small, by leveraging real estate to the maximum and profiting not only from the money they had in the deal, but also from the money they had borrowed as well. I remember hearing many times the phrase "be careful…leverage works both ways" from saner heads (we called them sticks in the mud back then) who pointed out that highly leveraged investments can mean big earnings while things are going up, but they also mean it is easier to get wiped out when things turn against you.

I get asked a lot whether or not I'm seeing any signs of things picking up in the real estate market. I've always tried to have an optimistic outlook, but in the last year or so I've had to get pretty creative to think of upbeat, positive ways to say business still stinks. Lately, however, I am starting to get more purchase related calls than I have in some time (as opposed to refinance related, in which property doesn't change hands). Unfortunately I am only one of a gaggle of mortgage people, and an increase in my business is insignificant to say the least, and is more probably due to an interesting article in my newsletter than any market changes.

 

Carl Trawick is a Mortgage Specialist and Licensed Mortgage Broker with the firm Access e*Mortgage. He can be reached at 904-343-1145 or ctrawick@nefcom.net