Mortgage bonds normally don’t perform well in the face of inflation largely due to all time record high oil prices. However, because of the overall negative sentiment about the economy over the short term investors have been reluctant to jump completely into stocks. This has given way to another dip in mortgage interest rates as bond prices have increased. We will continue to watch economic news closely. Fed minutes from their last meeting will be released tomorrow, initial jobless claims on Thursday, and existing home sales on Friday.
The 30 year fixed mortgage interest rate continues to trade below 6.0% for AAA borrowers (certain terms and conditions apply and rates subject to change). This as a result of credit markets reopening and consumers being forced to cut spending and concentrate on debt payments which has increased their ability to obtain credit at competitive rates. Continued high levels of existing home inventory throughout the country lead us to see this as a significant buying opportunity with solid long term equity gains for investors and homeowners, alike. Also, we continue to see the rewards of razing and rebuilding, and renovating homes in highly desirable micro-markets throughout the country.
In today’s market a real estate purchase 20%-30% below market value constitutes a great deal and should mitigate any long term value damage to other comparable homes in the area when it comes time to appraise these properties in later years.
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Stay tuned and stay in touch with your mortgage professional. Thank you for the opportunity to serve you and your clients. David. 919.851.0999.
