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Market News and Trends

Mortgage rates at record low


As I have blogged previously, mortgage interest rates are being held down for now by Fed purchases of mortgage-backed securities.  That government-subsidized demand is holding bond prices up, and yields low.  The average 30-year mortgage was priced yesterday at 4.71% — truly incredible!

As I have also written previously, the Fed’s budget for these purchases is scheduled to end in March 2010.  Unless that budget is expanded and extended, one of two things is very likely to happen in April:  (1) independent, objective, investors will establish the value of those securities — pushing prices down and yields (i.e., interest rates) up, or (2) fewer mortgage-backed securities will be purchased at auction, meaning less money will be available for new mortgages — limiting the supply of loans at the same time the end of the extended/expanded homebuyer tax credit is pushing demand to a peak, which will in turn exert upward pressure on mortgage interest rates.

Based on available economic evidence at this point, mortage rate increases next Spring are inevitable.  An increase from 4.71% to 6% will raise the P&I payment on a $200,000 loan about $150 per month.  That’s significant in the $1,100/month range, especially when underwriting guidelines now limit debt-to-income to 45% instead of the 55% ratio we have used this year.

Low seasonal prices, low interest rates (f0r now), and tax incentives (ending in April) — now is the time to make your move.

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About Bill Morris, Realtor

More than thirty years of business experience (high tech, client service, business organization and start-up, including many years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs: -- Seller Representation is a comprehensive process that begins with thorough market analysis and consultation, continues with properly staging the home to achieve the highest price possible in a reasonable time on market, a complete program of marketing and promotion, ongoing updates and communication, closing coordination, and follow-up throughout (and after) the sale. -- Buyer Representation is also full service: shopping, previewing, price and market consultation, contracting, negotiating, coordination of inspections, appraisals, repairs, and closing details, and follow-up beyond the closing of your purchase to ensure your lasting satisfaction. Because the real estate industry is becoming more sophisticated and challenging every day, you need a professional that understands the industry and is positioned to stay ahead of the game. I go the extra mile to help you achieve your goals. That's why I constantly research the market and property values so your home is priced effectively from day one. I also make sure the public knows your home is for sale by using innovative advertising and marketing techniques to attract potential buyers.

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  1. Pingback: Act soon to take advantage of low interest rates « Bill Morris' Austin Real Estate Blog - January 28, 2010

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