Regardless of the low rates, the demand for housing is still weak and unstable. Actual sales are actually lower than the sales forecast, and prices are still dropping. The low interest rates permit lenders to offer their best deals, while borrowers are experiencing a difficult year in terms of meeting the criteria for lending. Still, some home buyers are able to take advantage of the low mortgage rates.

However, these rates are not helpful for a large portion of potential home buyers. This is because they can’t take advantage of the current rates because banks and lenders have tightened loan rules and credit standards. Even with the low rate, loan applications dropped 4.3% against previous week. The same goes for refinance applications, which went down by 5.2%.

In England, the average mortgage rate payment is 494 Euros a month, making it their best mortgage deal in a decade. Records from ten years ago showed that 2008 had the highest mortgage rate. It appears that home buyers could actually cope with England’s base rate should there be any changes on the interest rates or circumstances. Those who would grab the low mortgage rate said that they already have plans in case the rates go up again. Their strategies are cutting down “lifestyle” expenses such as clothes, shoes, holiday trips, dining out, etc to balance mortgage increase. The Bank of England’s forecast is that lenders will widen their mortgage range followed tougher and stricter lending rules. The Bank’s latest survey found that lenders are designing a better deals made especially for small-time depositors. Small-time depositors are first time buyers and this new great deal will somehow help them acquire property. Nevertheless, lenders believed that overall approvals for loan application may drop due to low credit approvals brought about by tighter loan rules following unstable economy and euro crisis.

Before retiring from the mortgage business I would receive at least one call each week from someone asking me to tell them when rates will be at their lowest. I always told them the truth; I don’t have a crystal ball and neither does anyone else.

So here’s my theory for those of you who care about the best time to make a decision on buying a new home or refinancing the one you are in. You start with today because that’s all you really have to work with right now; this moment. Find out what the rate is for the type of loan you want and know that for right now that’s what it is.

If you are buying a new home, sit down with your loan officer and calculate what the overall payment will be and see if it fits into your budget the way you envisioned. If so, it’s a good rate and price for you and you can move forward with the help of your lender and realtor. If it’s not within your budget you are either looking at a house that is not affordable for you at the moment or the rates are too high right now.

If you are considering a refinance to your current loan, take your most recent mortgage statement to a lender and let them help you determine if it makes sense to refinance your current loan. This is more than just comparing payments because the new loan has additional costs to it that need to be factored in. If you make that cost up within the first two to three years due to a lower payment, it just might make sense to refinance your loan. However, when in doubt, get several opinions before moving forward.

Either way, now is a great time to check it out because rates are low right now and no one really knows what will happen tomorrow, next week or next year. That’s the truth!

Because of the unexpected move last week by the Fed, (they bumped up the Fed Discount Rate ¼% which is the rate they charge member banks to borrow) the  signal is one of confidence that the banking crisis may be close to over. This encourages banks to borrow from one another instead of the Fed. It also signals to the market that the Fed is okay with rates inching up a bit to head off any inflation the recovery may be generating.

Even though it may mean slightly higher rates, it should be viewed as a good conservative move on the part of the Fed to avoid having to hike rates drastically later. This means things are looking up. While waiting to purchase a house will mean missing the lowest prices and interest rates that will be available this year, it is a good thing that the overall economy is starting to show definite signs of recovery. If the time is right for you to buy, now is still the time.

Though no one has a crystal ball, there is a lot of discussion about the real estate and mortgage industry right now.  I have heard things that seem to be rather outrageous, like interest rate going to 2 and 3% and things that seem more reasonable, like interest rates going to 4 to 4.5% for both buyers and those who can free up some money by refinancing.

No matter where interest rates go, make sure you take the time to get several Good Faith Estimates to compare the costs of the loan.  Most people forget to look at the overall cost and only focus on the interest rate.  If you don’t know how to read a GFE (Good Faith Estimate) go to your accountant; they should be able to help you and are an independent source.  If you can’t get a GFE, don’t do business with that person or company.  It makes common sense to do business with someone that will give you the paperwork trail.

Home prices are expected to fall some more before they level off, especially in the areas that have been hit hard like Florida and California.  It does look like 2009 is going to be a great years to refinance your current loan to a lower fixed interest rate or to purchase a home at a good price and interest rate.  However, just keep in mind that, anything can change at any time.

The holiday season is always a fun time.  You get to go to everybody’s parties and see old friends and catch up with people you haven’t been around in a while.  It’s no difference in the mortgage and real estate industry and this last week has been fun.

One of the biggest topics of discussion has been the recent drop in mortgage rates.  Some people are asking if rates will go down again to the 4.5% range and if they do, what will happen.  Will the industry go through another refinance boom?  My position has always been, “who knows?”  As long as I have been in the business I have never met anyone who can predict the rates going up or down.  Everybody hopes and wishes they continue to go down but, one of my last emails of the day on Friday, 12-5-08 said, “IMMEDIATE RATE CHANGE – for the worse”; and just like that, rates went up.

We’ll have to wait and see if they go down again.  I’ve got my fingers crossed; do you?

A few weeks ago Fannie Mae released its first earnings report since the federal takeover.  To say the least, it wasn’t good.  The media used words like dismal and gruesome.  The reason was Fannie Mae had the largest loss of any U.S. based company this year and yes; this was AFTER the federal takeover.  So when Citi almost imploded right after this information was released, the government had to step in yet again to bail out a long standing financial institution.

What they did this time was to guarantee the bad mortgage backed securities to reduce the overall losses thus giving Citi some breathing room.  This government guarantee has seemed to relieve some of the pressure for the banks thus giving them some incentive to loan money for mortgages, thus pushing the rate down.  I don’t make commentary on what is happening, I just try to drill down what is going on into understandable chunks based on my understanding, which, I’m sure, is limited.  At any case, I hope this helps you to understand the process if not the reasoning behind the moves made by the Fed and the U.S. Government.

Bottom line: if you are in the market to buy and home or wanting to refinance a home, now is a good time to do either.

For all of those waiting for the rates to come down even lower in order to purchaser a home, you may have waited too long.  Rates went up from .500 to 1 point last week and they are holding today.

People still think mortgage rates go up and down with prime.  I have blogged and talked about this to a lot of people but for some reason, people want to believe what they want to believe whether it’s true or not.  (Sounds a lot like politics, doesn’t it)

Mortgage rates follow mortgage back securities (MBS) and the bond market.  Lately these two elements have been at opposite ends of the spectrum so no one knows what to watch and who to follow in order to see where things were headed.  However, the market will always be conservative and that’s what it is doing today.

Rates could very well go back down in time and they could continue to go up as well.  If you are in the market to purchase a home and are waiting on rates to reach a certain level, you may never own your own home.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… C: wait… SD: wait…