The weather is unseasonably cool and the mortgage rates are hot, hot hot! Falling unexpectedly below 5 percent – again – the Wall Street Journal this morning reported that “rates could drift as low as 4.5 percent this summer from 4.86 percent now, instead of rising to 6 percent as some economists projected.” The Journal cited the European debt crisis as the reason for this dip with international investors shifting their money to U.S. bonds.
And now with mortgage rates at the lowest levels of the year (and, according to the Associated Press, back near 50-year lows), what does this mean for you, the Phoenix real estate movers and shakers?
If you’re a buyer – This is good news. You may have missed the homebuyer’s tax credit, a government incentive that expired last month, but not to fret. With mortgage rates this low, it’s a great time to buy. For example: say you are interested in purchasing a home for $400,000. By cutting just a half a percentage point from a 30-year loan, you will save $45,000 over the life of that loan. That savings is nothing to sneeze at.
If you’re a seller – This is also good news. The Journal referred to “a general rule of thumb . . . that every one percentage point decline in mortgage rates is the equivalent of roughly a 10 percent reduction in the home price for the buyer.” This will make your home much more affordable to buyers and offer you an opportunity to sell your home for the price you really want. It should also equate to a larger pool of qualified buyers for your home.
If you’re a homeowner – Again, this is good news. If you haven’t refinanced already, think about it now. These rates can’t stay this low forever.
All in all, this is good news. So get out there, enjoy this weather and get into the real estate market.
As always, let me know how I can help.
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