Market Analysis
(We
attempt to update this consumer comment section at least weekly and sometimes more
frequently should news warrant. But, there are times when we are on vacation or
there is other interference and an update is delayed. If you find that the
comment is out dated, please check back. We will do our best to remain as
current as possible in helping you determine the direction of long term
interest rates. Thank you!)
June 22, 2010
The economic news roller coaster continues. In spite of home
mortgage interest rates being at their lowest level in nearly decades existing
home sales declined. While many attribute the decline to the elimination of the
home buyers’ tax credit program that may be too simple an answer.
Nationally, inflation appears to be in check, home inventory
appears adequate and home values seem stabilized. The inability from Washington to affect the
unemployment situation in any meaningful way is perhaps the biggest reason for
the continued lag in home purchasing. People either out of work or concerned
about the continuation of their employment don’t buy homes, regardless of how
low the home values and/or interest rates are.
Internationally, economists still are split on the impact
that the European economic difficulties are having on our U.S. economy. China’s devaluation of their
currency is another concern nationally as it could impact Chinese investors’
willingness to purchase our debt.
The Federal Open Market Committee (FOMC) meeting on
Wednesday may provide a glimpse of how the FED anticipates this market
continuing. In the meantime, potential home buyers have some decisions to make.
With interest rates at near their historic lows some are putting off home
purchases because of worries that home prices will continue to fall. Others
anticipate that rates could fall more. Waiting for rates to decline more,
however, could be a mistake. The risk is more likely that rates will increase.
The “move up” market continues to struggle as too many
would-be seller/buyers no longer have sufficient equity in their current homes
to allow for a move up transaction. This has an impact on the amount of
inventory available and, in turn, tends to stabilize home values.
The media continues to suggest that loans are hard to
acquire. While qualifying guidelines have stiffened a bit, home financing is
alive and well. Acquiring a loan now requires full documentation and a little more
effort on both the buyers and lenders part, but this remains good time to buy.
Conventional financing has reintroduced the 95% loan to value ratio loan
(requiring only 5% down payment) but a borrower is require to have a credit
score of 720 or better. The Guaranteed Rural Housing loan is still popular as a
100% loan option for buyers with minimal cash and “reasonable” qualifying
standards. Although FHA loans have
toughened their qualifying requirements they are still available with 3.5% down
payment.
No one knows what will happen moving forward. Our best
advice is to purchase a home when you’ve found the “right” one and are able to
acquire acceptable financing. In order to avoid disappointment, we urge that
one gets pre-approved for a loan even before looking at homes to purchase. Call
us at Humboldt Home Loans today for all of yur real estate finance information
and/or a FREE pre-approval consultation and be assured of your ability to
purchase.
John Fesler 269-2318 Jody Harper 269-2304
You may find several tip sheets (found in our "tip sheet" section
of this web site) interesting as you determine if you should proceed with
either a purchase or refinance transaction . . . check out "Never Been a Better Time
to Buy", "Refinancing" and "Locking the Interest Rate"..
Here are a few additional tip sheets of particular interest. You may view my
complete tip sheet table of contents by clicking below.