Lower Rates Help Sell Houses
Fixed-rate home mortgage rates fell again! The 30-year fixed-rate mortgage has set another record low, according to a weekly survey by Freddie Mac. The 30-year rate averaged 5.14% for the week ended Dec. 24, 2008.
Reducing rates by about one percentage point effectively lowers home prices for buyers by roughly 10%, according to Lawrence Yun, chief economist for the National Association of Realtors. Well qualified buyers now have access to historically low interest rates and a large selection of homes. Read WSJ Article.
From a buyer’s perspective, the lower payments associated with lower mortgage rates may allow more people to qualify for a loan. From a lender’s perspective, cutting rates this low means there is little margin for error: lenders will tighten loan requirements to limit risk.
Interest rates are not the problem in the Tampa housing market right now. Buyer demand may not change much at the current price levels unless lending requirements change. There are a fixed number of buyers in the market to who qualify for loans at current pricing levels, but we expect the rate cut to have some effect. See full story.
- By Dale Bohannon
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