PREMIER Business & Finance: Mortgage Rates, Are you Missing Out?

Nov/Dec 2011 Vol 63: Mortgage rates continue at historic lows…are you missing out if you don’t dive in?



Mortgage rates continue at historic lows… are you missing out if you don’t dive in?

It seems that all reports on the economy, housing, and mortgages these days come in the form of a “good news/bad news” scenario. Do you want the good news first or the bad news? Well the good, great, historic news is that mortgage rates are continuing at all-time lows. This combined with record affordability could coalesce into a “good news/good news” scenario for those who take the home buying plunge.

If you can lock in a low mortgage rate, in some cases under 4%, you make your ideal home more affordable and potentially accelerate the accumulation of equity in your investment. Factoring in the affordability of current prices and you end up with unprecedented opportunity.


 “The interest rates are so low, that it is essentially a built-in price reduction for home ownership. For instance, the cost of a $1M loan at a rate of 4.0% compared to the low rates of just two years ago at 6.0% would reduce the monthly payment by over $1,200 or approximately 20%. If you take into account that most home prices have also decreased during this same period, the combined price reduction can essentially be as much as 50%.”

Sean A. Barry Private Mortgage Banker Mutual of Omaha Bank 858.369.3117



The Jumbo market

As we headed into October, the looming limit decrease to conforming mortgage loans weighed heavily on the market, particularly in Southern California where home prices are still relatively high.


Prior to October 1 loans up to $697,500 qualified for Fannie & Freddie backing meaning that lower interest rates would be available for mortgages up to that amount. After October 1 that limit went down to $546,250, a drop of $151,250, meaning many potential homeowners in the county would need to seek “jumbo loan” financing. “Reducing the conforming loan limits will test whether private lenders are willing and able to step up, but doing so this year may be premature, “stated Mark Zandi, chief economist at Moody’s analytics.



“It has yet to be seen whether the recent reduction of the super conforming loan limit from $697,500 to $546,250 in San Diego County will have an impact on home purchase sales data. However, with Jumbo mortgage rates at super historic lows, the cost of home ownership is still at all time lows even using Jumbo financing. There is talk that the $697,500 limit may be restored, but currently the Senate and the House of Representatives do not seem to agree on the appropriate action. With the Federal Reserve making it clear that they are taking efforts to help keep rates low for an extended period, home purchase activity should slowly increase in 2012 and in the coming years.”

Sean A. Barry Private Mortgage Banker Mutual of Omaha Bank 858.369.3117

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