Christian Real Estate Blog

The TRUTH about current rates

Realty Times - Real Estate News and Advice: "According to Freddie Mac, rates for 30-year financing hit 6.31 percent (with .5 points) last week. For ARMs, the 1-year LIBOR rate stood at 3.2710 while the 11th District Cost of Funds Index was at 2.972 for October. To get the full ARM rate you need to combine the index with a 'margin' of 2 or more percentage points.

The reality of these mortgage levels is that:

* Relative to rates seen during the past five decades, today's mortgages are cheap.

* Every time rates move up or down the pool of potential buyers is impacted.

* With rates rising it is logical to assume that sales will experience some fall-off if only because the pool of potential buyers is somewhat smaller because with higher rates fewer people qualify for given levels of financing. With fewer bidders and less demand, there is less pressure to increase prices.

* That there is less pressure pushing prices up does not mean prices will decline. It could simply mean that prices will go up but not as much as would otherwise be the case with lower rates.

* Slower price increases might well be good for everyone -- when home prices grow too quickly buyers are frozen out of the market because wages do not go up with equal speed.

* What happens locally and what happens nationally may "

posted by Justin Smith @ 12/04/2005 02:32:00 PM