Hello everyone: I was thinking this evening on my way home that mortgage rates, in my opinion, will continue to fluctuate wildly for the foreseeable future. Currently, I'm seeing a 30 year fixed mortgage at 5.625% O.A.C. It may even go to 5.75 or 5.875% by tomorrow. Last week, rates were as low as 5.375%. Why the fluctuation? It all has to do with the stock market. If stocks are battered, typically people are pulling their money out and investing in safer vehicles such as bonds. This typically causes mortgage rates to be low. Today, the announcement that Chase was upping it's offer on buying out Bear Stearns (a giant investment bank that would have failed otherwise) from $2/share to $10/share buoyed the stock market at the expense of mortgage rates. I expect the trend of fluctuating markets to continue as they attempt to find their footing.
We all wish it were otherwise. The market is tough enough as it is right now. Eventually, I see us reaching more stable ground. But it may not be until the second half of this year or the start of 2009. In the meantime, I'm advising all my clients to listen to their mortgage professionals about when to lock in a rate. It's too tough to predict precisely when rates will be ideal to refinance or buy. Consumers: If you have any doubts at all, heed those and lock in the rate today. I've seen too many cases where people gamble and then walk away with nothing. The only thing that leads to is frustration and disappointment. The opportunity is now. And the smart, savvy buyers are taking full advantage.
I recently attended a seminar by Brian Buffini (www.buffiniandcompany.com) and they talked about this being the best buyer's market in the last 15-18 years. It truly is the perfect storm because prices are moderating and interest rates are low. But as the economy starts to heat up again, it will be a seller's market. That will probably mean higher prices, less selection, and potentially more expensive money.
Good luck to everyone out there. I personally know people who are doing great in a challenging market because they adjusted accordingly. Besides, we all welcome the competition if it's with another true professional! Have a great night!
Paul
Paul McFadden
It will be an interesting year, we will see how everything turns out!
Realtor Tom Davis's Comment
Thanks, Stacey. I always enjoy your comments as you're well informed. Take care.
Thanks, Tom. In our businss, it always pays to be optimistic. There is always a silver lining!
Paul
What we have is what it is going to be until after the election. While they will go a little higher or lower it is what it is. Now lets go sell them
Tony
Tony: That sounds good to me. Have a great day!
Paul
I made a mistake over the past few weeks (after the day back in January that we saw nearly a half point rate increase intraday). You know when you get to close to a picture you can't see the context, and you zoom out a bit and then you see the whole picture...I was too close to the economic data and in this market where there is such huge fluctuations, I was starting to get sea-sick. There are so many wild-cards out there right now that we have NO clue about...China, Soveriegn investment funds, Treasury auctions that are larger than announced (yesterday for example.)
My response to folks when they ask..."Rates are great compared to 1983!"
Thanks, Rich. It's always nice to get your insights. We bought our first home in 1993 and the 30 year fixed rate was 7.25%. Obviously, at 5.5% today, rates are pretty darn good! Take care.
Paul
Paul:
My prediction is rates will head down. Stock market rally is false. Look for rates to go downward over the next 6 mos.
Bill: The question is how much. Borrowing money is already pretty cheap. I'm not sure a 30 year fixed will hit below 5%. The interesting thing is what the ARM's do. The market is recovering and I think we might see 5/1 ARM's at 4.5%. Time will tell. Have a good night!
Paul
Thanks, Phil. I like your approach. Why take chances these days? Take care.
Paul