Many Buyers continue to fence-sit waiting for the market “bottom” stating they are either waiting for the prices to drop another 45% or for fixed interest rates to fall to 2.5%.  (yeah, right!)
 
Regarding interest rates, a little perspective may be in order.  For that reason, Will Dukes has conducted some research on the 30 Year Fixed Mortgage Rate going back to the mid 70’s.  Please click on the attachment provided that will show interest rates are the lowest in the history of our nation and most likely will be in our lifetime.  (Who the heck was buying in 1982 with an average rate of 16% with 2.2 points!)
 
Just as important to understand is this:  for the last several months, rates have continued their historically low levels simply because they are being manipulated by the Federal Reserve and the US Treasury.  15/30 year fixed rates are determined by the prices that investors pay for mortgage backed securities (MBS) as traded on private trading desks across the nation.  Just this week, the Treasury borrowed an additional $101 BILLION dollars in order to continue running the government and to buy more MBS to keep mortgage rates low and stimulate the economy.  THIS WILL NOT CONTINUE!  Eventually, the Fed/Treasury will duck out and rates will gravitate to their natural position.  Prior to Uncle Sam’s buying spree, 30 FRM rates were hovering in the 6.25% range and there is no reason to believe that they won’t head back there eventually.  This is important to convey to your clients who may be unaware and heading for disappointment if they wait too long!
 
Information provided by Will Dukes, Summit Mortgage, wdukes@summit-mortgage.com