Dennis Norman
I’ve been in the real estate business for over 30 years now and hate to admit that I’m witnessing something now I’ve never seen before. Throughout my career I’ve seen the real estate market struggle at times usually at the hands of a recession, stagflation, high interest rates, high unemployment or some other economic issue. However, lower interest rates always seemed to help spur activity and move the market Even in the early ’80′s when mortgage interest rates soared to near 18 percent home-buyers reacted when sellers offered lower interest rates through owner-financing and buy-downs, but not today. We are looking at mortgage rates that are just down-right CHEAP and home-buyers are still making themselves fairly scarce. Not good…
According to the Mortgage Bankers Association (MBA) weekly mortgage applications survey for the week ending July 9, 2010, the MBA Purchase Index (a measure of the volume of loan applications related to a home purchase) decreased 3.1 percent from the week before. This index has decreased in 9 out of the last 10 weeks.
The four-week moving average of home purchase mortgage applications lost the little bit of ground it gained the week before and is now down 2.4 percent.
Last week the Mortgage Refinancing index was on the rise as home-owners rushed to take advantage of low rates and refi but this index decreased 2.9 percent as the refinance share of mortgage applications remained constant at 78.7 percent.
I think the bottom line is we can’t ignore reality. Low interest rates and home prices don’t make up for fear and uncertainty that many people have today about their jobs or businesses, unemployment, bankrupt or near-bankrupt states they may live in or where our country is headed between record-level spending and debt, wars, and so on…..OK, I’ll stop the gloom and doom thing….I’m really not that way, I just think reality is you can tell people “everything is OK and getting better” all you want, and some will believe it no matter how bad their plight, but I think the majority of us don’t care what we are being told if we don’t see it in our world. Therefore, low rates notwithstanding, we are not going to see a recovery of the housing market until we see a recovery in the areas of jobs, government spending and debt and people feel more comfortable with their financial future…(in my humble opinion of course)
Interest rates for the week ended July 9, 2010:
- 30 year fixed-rate mortgage interest rates increased slightly to 4.69 percent from 4.68 percent, with fees increasing to 0.96 percent from 0.86 percent on loans that are 80 percent of the value of the home.
- 15 year fixed rate mortgage interest rates increased slightly to 4.12 percent from 4.11 percent, with fees increasing to 1.04 percent from 0.93 percent on loans that are 80 percent of the value of the home.
- One-year ARM interest rates remained steady at 7.20 percent with fees decreasing to 0.22 percent from 0.24 percent on loans that are 80 percent of the value of the home.
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