Mortgage Rate News

Existing home sales rose in July, boosting the annual rate by 3.1% over the June revised pace for existing home sales. However, this news was tempered by the fact that more homes are on the market — and that home prices continue to fall. The Wall Street Journal reports on the trend in existing home sales:

Falling prices are restraining sales, as would-be buyers wait for a better deal instead of signing on the dotted line. High inventories are driving down prices. Prices must fall further for inventories to recede. Analysts say inventories have a good distance to drop for a signal that price deflation is nearing an end.

Despite the sales increase, inventories of homes rose 3.9% at the end of July to a record-high 4.67 million available for sale, which represented an 11.2-month supply at the current sales pace. There was an 11.1-month supply at the end of June.

This means that even though existing home sales were up in July, there is still quite a ways to go before the market hits bottom. Indeed, homes are expected to be on the market for around a year before selling, at the pace that things are moving. This means that it is still very much a buyer’s market — if the buyers were buying.

Looking for a good deal on a home

If you are looking for a home, now may be a good time to consider buying. Home prices may fall further, but trying to time the market can be risky, and may backfire. If you have your finances in order, and a good credit score, you might be in a good place to make a deal. Here are some things to look for when you try to get a good deal on a home:

• Foreclosures (look for those in good shape, though).
• Homes that have been on the market for a while (sellers more willing to deal).
• Motivated sellers (who may need to move quickly, or who are trying to avoid foreclosure with something like a short sale).

Mortgage rates are reasonably low right now, and there are some great deals out there. If you are looking for a home, it may be the time to pounce.

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Mortgage interest rates have fallen slightly , reaching 6.47 percent for a 30-year fixed mortgage loan. Even though this is down from recent weeks, I’m still glad that I bought my home last year, for a fixed rate of 6.02 percent.

With the housing market slow, and mortgage lenders having a hard time drawing business, you might think that interest rates would be dropping as lure. However, that’s not how it has been working. Businessweek reports on why mortgage interest rates have remained above 6 percent:

The 30-year mortgage has been above 6 percent since late May as financial markets have become convinced that rising inflation pressures will keep the Federal Reserve from cutting interest rates further even though the economy remains mired in a period of significant weakness.

Local mortgage markets

Interestingly, I found, my own mortgage interest rate was still low for the time — even a year ago. According to Businessweek, the interest rate on a 30-year fixed loan this time last year was 6.52 percent. Apparently, mortgage interest rates have fallen a bit overall since last year.

And, apparently I got a real steal.

This also underlines the difference in mortgage markets. While there is a national mortgage rate trend that does affect how much you pay locally for your home mortgage loan, it is worth noting that there are other factors that go into it as well — local market is a big one.

My mortgage interest rate came as a result of shopping around. At the time, locally, many of the mortgage lenders were competing for business. On top of that, the housing market was doing pretty well. So, as I talked to different loan officers, all of them were interested in trying to convince me to do my mortgage through them. Offering a lower mortgage interest rate was part of the deal.

No matter what the national mortgage interest rate trend is, there is no substitute for shopping around locally to try and get the best possible deal on your home mortgage loan.

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Right now, there is considerable debate concerning whether or not now is the right time to buy a home. I bought a new home last year, since the timing was right for my family. If the timing is right for your situation, you might consider now a good time to buy a home. CNN Money offers this encouraging view of the housing market:

“Homes became more affordable because median income and interest rates remained about the same throughout the country, as home prices continued to fall,” said Gopal Ahluwalia, an NAHB economist.

With home prices down, and a supply of homes on the market, you are more likely to find a good deal. On top of that, you can get an interest free loan for part of the home in the form of a tax credit — if you are a first-time homebuyer.

Despite the benefits listed above that can come when you buy a home now, many people are hesitating. The two main reasons for this hesitation include:

1. Trying to time the housing market. In this scenario, some would-be homebuyers try to wait until the bottom, when home prices are their lowest. They try to time it so they buy at the trough. The problem with trying to time the housing market is that it is very difficult to do — the chances of you doing this successfully are very slim. Conditions are good right now; even if they get better, they won’t be that much better.
2. Worries that home prices will continue to decline. The problem with this thinking is that it view home ownership as an investment, rather than a purchase. Also, it discounts the idea that over time real estate generally appreciates in value. If you plan to stay where you are at for at least five to seven years, chances are that home prices will be rising when you decide to sell. If you are looking to sell in less than five years, than maybe now is not the right time to buy a home, since it could take a while for this down cycle to sort itself out.

Overall, if you want to buy a home that your family can stay in for a while, now is a pretty good time to do it. Home prices are lower than they have been in a long time, and mortgage rates aren’t very high.

Tags: buy a home, right time buy home, home mortgage loan, tax credit,
mortgage loan blog, home prices