Tucson AZ Home Loan Info

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Tick Tock, Tick Tock... Inflation Will Make You Wish You Had Bought When Interest Rates Were At 6%.

June 10th, 2009 marked the highest yield for the 10 Year Treasury bond is the past eight months.  That yield was 3.9%.  What that means for the would-be homeowner is rising interest rates for a 30 year mortgage.  The average 30 year mortgage rate for the week ending June 18th was 5.625%.  That's wonderful from a historic perspective, but not so great for buyers who could have had an interest rate as low as 4.5% only two weeks earlier. 

Buyers are confused as go whether rates will come down again, and have decided to adopt a wait-and-see attitude.  That's not surprising, considering that the bond market is equally confused. Mortgage applications are at a seven month low.

It won't be long, in my humble opinion, before mortgage rates at 6% will be considered attractive, and we'll be pining for the days of 5.625%.

The reason:  Consumer Price Inflation.  Central bankers around the world are grappling with trying to reverse the stimulus they created just months ago.

Reverse it?  Isn't the Federal Reserve going to give us more stimulus?  The answer is that they cannot.  Don't look for a $15,000 gift from the government (your neighbors, actually) for first time homebuyers.  There was talk of monetizing the $8,000 first time stimulus for homebuyers so it could be used as the downpayment.  It hasn't happened.  It may not happen.

Here's the question facing REALTORS and their buyers:  Is inaction--doing nothing--the prudent course right now?  Or would you rather buy a home and secure your future?

 

 ___________________

I'm Mike in Tucson, your preferred Tucson, AZ Mortgage lender.
Mike Jones (Tucson Mortgage Company, LLC): Loan Officer in Tucson, Pima County, Arizona
Call me
if I can help you with a purchase or refi mortgage;
(520) 349-9090

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Comment balloon 15 commentsMike Jones • June 22 2009 11:11AM

Comments

Simple economics.

 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) about 10 years ago

Some of us remember the days of very high interest rates. At that time we thought that if mortgage interest rates ever got back down to 12%, we could live with that.

Follow me on Twitter:  http://twitter.com/roykelley  

Posted by Roy Kelley (Realty Group Referrals) about 10 years ago

What that means for the would-be homeowner is rising interest rates for a 30 year mortgage. 

Hi Mike,

I believe you're right.  There will be long-term consequences for printing so much money.

Posted by Bruce Brockmeier, Coached By Crouch (Internet Marketing Consultant to REALTORS®) about 10 years ago

I think you're right Mike. I remember my first mortgage was held at 10% by the seller. All our friends thought we had hit the bargain of all times. Interest rates were up to 14% and higher back then. I think we're going to head back up in that direction. You just can't continue to spend what you don't have without something having to give.

Posted by Suesan Jenifer Therriault, "Inspecting every purchase as if it were my own". (JTHIS-Professional Home Inspection Team) about 10 years ago

Mike,

Great post!  We may not know if home prices can still come down further but even if they did go down further, with interest rates rising (I also believe they are headed up) will negate that and more likely than not make houses less affordable to would-be homeowners.  This once or twice in a lifetime window of opportunity will not stay open for too long. 

Gerry's AR signature

Posted by Gerry Khatchikian, ASA, TRC, SFR about 10 years ago

Mike,

With our former society rising to middle class was great! Each step up the economic ladder meant life was better. As we convert to socialism the fools still think the same way. Truth is that, so called equality of out come is only good for the non-producers and the selected few anointed ones!

Rates are still great! But only a fool believes that we can maintain or lower rates in a time of inflation! Socialism is the ultimate ponzie scam!

Bill

Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) about 10 years ago

Bill,

You're right about that!  Rates can't continue to remain low without debt being retired at the Federal level, and that doesn't seem to be happening, does it?!

Gerry,

What is it that the Brits say?  "Spot on!"

Suesan,

I was a real estate developer selling new homes when first mortgages were 17%.  It's going to be a new reality.

Bruce,

It's good to see you.

Roy,

I remember them!

Lenn,

Yes it is.  Thanks for being the first to comment.

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) about 10 years ago

I have been saying buy now since spring and it looks like the low for interest and prices has past but we still have great buys available with wonderful rates.

Posted by Terry & Bonnie Westbrook, Westbrook Realty - Grand Rapids Forest Hills MI Re (Westbrook Realty Broker-Owner) about 10 years ago

Terry,

Yes we do!  I'd love to see some comments from the public, though.

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) about 10 years ago

It's amazing how people won't open their eyes to the obvious yet open them to what doesn't matter.

Posted by Goodbye Active Rain, Out of Real Estate about 10 years ago

Mike - the cowardly thing to do is nothing. The buyers who are waiting on the fence right now have already missed the opportunity of a lifetime, now they get the chance to watch it disappear into the sunset.

Posted by Larry Brewer - Benchmark Realty llc (Benchmark Realty LLc) about 10 years ago

GOOD MORNING MIKE!  Low home prices, lots of homes to choose from, low interest rates and all the other positive options available for Buyers -- inaction or doing nothing will only secure disappointment down the road for the "wait-ers".  --Gabrielle

Posted by Gabrielle Kamahele Rhind, Broker/Owner (KGC Properties LLC, Tucson Property Management & Real Estate) about 10 years ago

Hi Mike - Lots of folks in our neck of the woods believe what you are saying, that interest rates will continue their upward trend and all the buyers who have assumable FHA, VA and USDA loans will have a pretty attractive offering when the day comes to sell their place to a buyer who may want to assume their nice low interest rates.

Posted by Karen Cooper, Helping Homeowners w/Home Loans in 27 US States (Karen Cooper | Sr Retail Loan Originator ! NMLS # 223305 | 360 Mortgage Group LLC Austin Texas) about 10 years ago

Hi Mike! Love your title. Very Clever! Inflation will hit and I tell these buyers waiting for "A Free" home?

Posted by Monique Combs, South West Florida: Fort Myers, Cape Coral, Estero (Schooner Bay Realty., Inc.) about 10 years ago

Monique,

Time's a'wasting!

Karen,

Assumable loans were a hot ticket the last time we had hyper-inflation in this country.  Folks with assumable mortgages got better prices for their homes than the rest of us.

Gabrielle,

Amen!  Thanks for stopping by.  (Speaking of which...)

Tony,

What's the metaphor?  "You can lead a horse to water..."

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) about 10 years ago

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