Saturday, March 14, 2009

Mortgage Update

Markets, Mortgage Rates Improved:
Maybe it was the "daylight savings time effect"; perhaps it was just that a single good day in the stock market is enough to lend at least some optimism, serving to help form other good days. Of course, it could be just a "bear market bounce" for stocks. Whatever the case, major stock indexes flared higher this week, gaining back for the moment declines incurred since late February.

Mortgage rates managed a little dip downward. The Federal Reserve's program of buying up mortgage-backed securities from Fannie Mae, Freddie Mac and Ginnie Mae (FHA) is serving to keep rates fairly stable even as the government continues to issue considerable volumes of new debt to cover its various stimulus and spending programs. Any declines in mortgage rates could be the result of some minor increase in investor appetite for such investments, but we think it's more likely that demand-generated pricing premiums are easing as earlier cascades of refinancing requests have passed. In times of unmanageable volumes, lenders may increase rates somewhat in order to temper demand or to enhance the potential profitability of making a loan. After all, there's little reason to cut prices when the store is full of customers already.

If you are looking at Ann Arbor Condos, or planning to buy Ann Arbor real estate now is the perfect time - Interest rates are at historic lows, prices have declined to very affordable levels, and the government stimulus package offers $8,000 for first time home buyers. It's the perfect storm for purchasing real estate.

Courtesy Rick Richter, Goldstar Financial

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