Archive for July 2009
“What’s Going On with Inflation and Interest Rates?”
Lonnie Stevenson at Evergreen Home Loans just emailed me this note:
If you’ve seen the news lately, you know concerns about inflation are increasing. But what does it really mean to you?
The fact is, inflation is a very serious issue, and it will likely be on the rise as 2009 proceeds…and along with it, home loan rates will likely rise too.
To help you learn more about this important topic, I’m sending you a link to a short video, featuring a personal friend and business mentor or mine as well as the nation’s foremost mortgage industry expert, Barry Habib. In this video, you’ll learn how inflation impacts interest rates and what the outlook is for down the road.
Because home loan rates will be on the rise, if you or any of your family, friends, neighbors or co-workers have been considering a purchase or refinance, now’s the time to act.
Please contact me today to discuss your specific situation, and feel free to forward this email and video link along to others that you think might benefit from it as well.
ARMS yet to reset in Arizona Housing Market
When an Adjustable Rate Mortgage period ends and the interest rate “resets” or the initial low interest rate changes to what is typically a higher interest rate, there is a chance that the possibility of foreclosure on the home could increase if the owners aren’t able to afford the new higher payment.
Arizona does have a number of loans that are set to peak during the month of September 2010, and then again during the month of December 2011.
It’s probably likely that these are for 5 year Adjustable Rate Mortgages that were made during the 2005 and 2006 during the peak of the market.
There isn’t any way to really track which of these loans are going to are going to make it to their reset dates. Many of these homes could already be in Foreclosure, or for some people, there might not be an issue at all. If the rate resets at a price that the borrower can afford – it’s a moot point. Life will go on as normal, and the homeowner will continue paying their mortgage.
We’ll continue to monitor the pulse of the market and keep you updated with information. New home loans are available at very attractive interest rates, home prices are very affordable and there are a number of new homes to choose from – so if you’re thinking about buying a home, now is a great time!
Interest rate projections
Just got a weekly update in my email on interest rate projections from Katie Murphy at Hi-Tech Mortgage -
Prime rate is at 3.25% and is expected to hold at that rate over the next couple months.
The Discount rate is 0.50%
Fed Funds Rate is 0.25%
11th District Cost of Funds is 1.832% – expected to drop to 1.737% after August 12 – expected to drop to 1.646% after September 23 and down to 1.465% after November 4th.
WHAT DO THESE RATES THIS MEAN?
Well, The Fed Funds Rate is the interest rate that banks charge to each other for overnight loans made to fulfill reserve funding requirements. The Prime rate usually runs about 300 basis points – (or 3 percentage points) above the Fed Fund Rate. The prime rate is used as an index to calculate rate changes to short term loans. The Discount Rate is the interest rate charged to commercial banks on loans they receive.
None of these rates are tied directly to the rate buyers pay for long term loans such as 30 year fixed rate mortgages. These rates will affect short term loans like credit card rates, and even some short term housing loans like Adjustable Rate Mortgages.
I’m not an expert on lending – but I know people who are! If you are thinking about making a home purchase right now – there is a tremendous opportunity right now to experience home ownership with low interest rates, low price and a pretty good selection of inventory available. Call The Concierge Service Team at 928-854-5511 or email us at Dominic@TCSTnow.com. You might also want to visit our MLS searching website http://blog.havasuhomesnow.com
Pending Home Sales Record Fourth Straight Monthly Gain
This just in from the National Association of Realtor’s Research update:
Pending home sales show a sustained uptrend, rising for four consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the latest survey. The Pending Home Sales Index increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004. Lawrence Yun, NAR chief economist, cautions that there could be delays in the number of contracts that go to closing. “Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”
In Lake Havasu City – the market pulse since the beginning of the year shows the following for single family home sales:
January 2009 – 85 Sold – $111,038 Average sales price – 140 Days on Market
February 2009 – 102 Sold – $108,031 Average sales price – 113 Days on Market
March 2009 – 148 Sold – $222,883 Average sales price – 128 Days on Market
April 2009 – 162 Sold – $266,544 Average sales price – 155 Days on Market
May 2009 – 137 Sold – $188,469 Average sales price – 115 Days on Market
June 2009 – 159 Sold – $151,478 Average sales price – 103 Days on Market
Things look to be continuing on that upward trend as the statistics for the first quarter of July already show a solid number- coming in at 54 home sales so far.
