I think we all know of a friend or family member who has gotten a mortgage rate that is almost unthinkable. Just the other day, a friend of mine mentioned that he got a 4.25% 15 year fixed rate mortgage. I know mortgage rate trends have been going down, but this much? I almost didn’t want to believe her, but she showed me the documentation and she really got a fixed mortgage rate that is almost unheard of. She explained that she is going to save over $230 a month on a mortgage payment by refinancing at such a low rate.
With this in mind, I am sure many of you have saved a great deal of money by getting an extremely low mortgage rate. It may have been a new home you were buying or refinancing your current home, but I would like to hear how difficult it was? I have heard horror stories about the refinance appraisal step of the process as many homes are being appraised at much lower than expected. With that being said, if you can save $230 a month on a mortgage payment, it may be worth it to go through all the trouble. Have lower mortgage rates helped your financial life?
I have known for quite some time that there is a strong relationship between daily mortgage rates and the 10 year treasury rate, but I could never find the actual equation. Thanks to Subprime Blogger and Calculated Risk for the following equation that shows the relationship between the 30 year fixed rate mortgage and the 10 year treasury rate:
y = 2.7283(x)^2 + .5881(x) +.0308
As stated on Subprime Blogger, this equation shows that mortgage rates should be around 5.477% and the last time I checked they were at 5.35%. Pretty close if you ask me as there is never a perfect correlation. Just to start the conversation, do you use the trend of the 10 year treasury rate to determine where mortgage rates are going? Do you even check mortgage rates on a consistent basis or just take the rate that is offered to you when you want to buy or refinance a house?
Since taking over as the President of the United States, President Obama as seen average mortgage rates rise, foreclosures continue higher and the unemployment is trending towards 10% nationally. All of these statistics have seemed to skyrocket since Obama took office. There is no doubt that former President Bush has a lot to do with these scenarios, but shouldn’t we start to see some type of improvement. Not only have we NOT seen improvement, we have seen the downward trend in the economy accelerate.
We keep hearing that things are getting better but what has changed? Are their more jobs out there? Are home prices increasing? Are foreclosures slowing down? No, No, and definitely No! All the government plans to assist in these areas have yet to take effect. We have spent BILLIONS of dollars to try to make things better and it seems they aren’t helping at all. I realize that it will take time and I am going to give that to our president, but right now I am very skeptical.
AUTHOR: Patty Cramer
Reading the title of this article will immediately infuriate many of you but let me play devils advocate. When Obama came into office, mortgage rates were trending lower and he did everything in his power to give every American citizen a chance to have access to those rates. For the first few months of his presidency, rates hovered around 4.9% and all was well in the housing market, right? With rates that low, surely there would be a sparked interest in real estate and home prices would bottom. Well, for the months of February and March, home prices did not bottom! In fact, 27 of 30 major markets were down month over month from February to March (this is the latest data we have).
To compound matters, mortgage rates were likely to head higher as the 10 year treasury rate started its uptrend at the beginning of 2009. Well, to put a ceiling on mortgage rates, Ben Bernanke announced that the Federal Reserve was going to buy back over $1 trillion in mortgage backed securities. Obama could have easily stepped in and stopped our printing press of a Fed chairman but he did not. As we fast forward to today, mortgage rates are now following the 10 year treasury rate and are trending higher QUICKLY.
To compound matters, many of the home owners who were trying to refinance at lower rates or modify their mortgage are now stuck. The rate they were quoted at just two weeks ago has increased almost a full percentage point. This has sent the mortgage market in a tailspin. Had Obama and Bernanke let free markets work, mortgage rates would have inched higher since March. Unfortunately, they tried to hold rates down which has caused them to shoot up almost a full percentage point in just two weeks.
This is horrible news for the housing market as prices are sure to fall even more. So, has Obama made the housing market worse than Bush did?
AUTHOR: Patty Cramer
Mortgage rate predictions were extremely easy to make from October of 2008 until just two weeks ago; in more words or less, mortgage rates were going down, down and down some more. There were some weeks where rates saw a slight bounce of .05% or so but nothing compared to have happened last week. Mortgage rates saw a jump of almost 50 basis points as rates went form 4.91% to 5.29%. This is very bad news for current and future home owners.
Many would say that it will lower home prices because mortgage rates are going higher but aren’t home prices extremely low already? Now that you know mortgage rates are going higher, possibly much higher, are you going to give up on refinancing? If you were in the market to buy a new home, has this changed your mind?
AUTHOR: Catherine Brammer
The current mortgage rates forecast is getting very difficult to figure out! For awhile we could just say that mortgage rates were going down but that seems to be over. Rates have went from 4.8% to 5.29% in two weeks! This is unreal; it is now the highest level we have seen in 2009. I sure hope this does not continue as many people are going to lose interest in the housing market. It would be very reassuring to see home prices actually increase in the next few months!
AUTHOR: Colin Keller
One of the largest economic problems that President Obama set out to solve after being elect president with the housing crisis. The steep decline in home prices coupled with an increasing amount of foreclosures and shorts sales have brought the United States economy to its knees. Some analysts are predicting that the current housing crisis could cause the worse recession since the great depression; some well-known pundits think it is inevitable.
There is no doubt that is it going to take some time for home prices to find a bottom before we start to see a stabilization and steady appreciate again. Most experts felt that the bottom would come in March of 2009 when Obama released the Making Home Affordable plan and Ben Bernanke announced that the Federal Reserve was going to buy back over $1 trillion in mortgage backed securities. Both of these events were very significant because they were going to spark the interest in the housing market.
The Making Home Affordable plan was designed to allow individuals to refinance at lower rates as well as gain access to historically low mortgage rates. Well, mortgage rates are going to continue to reach historic lows because the Federal Government is printing money to force mortgage rates to stay under 5%. With rates under 5% and Americans having the opporunity to lock in at historically low rates, wouldn’t you think that home prices would have bottomed in March when these two events took place.
Well, unfortunately that is not the case. The Case-Shiller March data came in very similar to the previous six months: home prices continued to fall. There were only TWO cities in the 20 city index that saw an increase in home prices from the month of February to March. Sadly, those two cities, Charlotte and Denver, were only up 0.3% and 0.1% respectively. This is VERY bad news. If there were any time for the housing market to bottom, it was March.
It is quite possible that many of the mortgage applications did not get completed in the month of March as mortgage lenders were scurrying to complete the process. With the spike in applications, it is very likely that lenders were not able to complete all the applications by the end of the month. We can hope this is the case as this might be the last move before checkmate. I am sure that the current administration has many more plans up their sleeves but I am not sure what can solve the current housing issue. Supply greatly outweighs demand and Americans are losing their jobs; what else is there to do to help this housing crisis?
Ultimately, President Obama and his administration are trying very hard to help the housing market but in the long run free markets have to work themselves out. When we see that some of the housing supply comes off the market and there is a growing demand for homes, we will see a bottom in home prices. My question to you is, has Obama helped the housing market at all?
