Interest in Rates

The mortgage industry experienced major adjustments this year. We saw many companies fail or be acquired by large industry giants. Unfortunately, even some of those giants became victim to the mortgage melt down and closed their doors.

Last week we saw some very interesting things happen in the mortgage industry involving interest rates.

Buyers have been hesitant to act on making a purchase due to the speculation that interest rates may come down. US Treasury officials have reported that a 4.5% interest rate may be introduced next year for primary home buyers only and not vacation homes or for refinancing.

Interest rates are already close to this 4.5 % rate. Here’s an example, as of the writing of this, December 12, 2008, a local Cape Cod bank announced a rate of 5% for a 30 year fixed mortgage with no points. This is truly an exceptional mortgage rate… it rivals the interest rates from the peak years of the market. If you’ve been following the mortgage rate activity, you know the significance to this 5% rate.

These low rates are not restricted to primary purchases. They are open to secondary markets, the refinance market and yes, even seasonal condominiums. As a side note, local banks will finance a seasonal condominium.

Low rates and significantly reduced listing prices are creating tremendous opportunity for buyers. Just look at any real estate advertisement and see where the prices are at, it’s incredible.

The snag for any purchase or refinance today, is to get approved for a mortgage. Your home must appraise, you must have low debt to income ratio and near perfect credit.

It will be interesting to see if the US Treasury moves rates next year to help the real estate market. But for now, even Representative Barney Frank stated that new measures most likely won’t happen for awhile.

What an interesting ride this is. The first few weeks of 2009 will be very telltale as to how the year may unfold for real estate.