Bill Morris: Texas

Mortgage rates at record low ... for now

As I have blogged previously, mortgage interest rates are being held down for now by Fed purchases of mortgage-backed securities.  That government-subsidized demand is holding bond prices up, and yields low.  The average 30-year mortgage was priced yesterday at 4.71% -- truly incredible!

As I have also written previously, the Fed's budget for these purchases is scheduled to end in March 2010.  Unless that budget is expanded and extended, one of two things is very likely to happen in April:  (1) independent, objective, investors will establish the value of those securities -- pushing prices down and yields (i.e., interest rates) up, or (2) fewer mortgage-backed securities will be purchased at auction, meaning less money will be available for new mortgages -- limiting the supply of loans at the same time the end of the extended/expanded homebuyer tax credit is pushing demand to a peak, which will in turn exert upward pressure on mortgage interest rates.

Based on available economic evidence at this point, mortage rate increases next Spring are inevitable.  An increase from 4.71% to 6% will raise the P&I payment on a $200,000 loan about $150 per month.  That's significant in the $1,100/month range, especially when underwriting guidelines now limit debt-to-income to 45% instead of the 55% ratio we have used this year.

Low seasonal prices, low interest rates (f0r now), and tax incentives (ending in April) -- now is the time to make your move.

Bill F. Morris, ABR, CRS, CDPE, e-PRO, MBA
RE/MAX Capital City
Call or Text:       512-785-3345
Toll-Free:           1-800-692-8784, x 162

Your personal referrals are the best measure of my success!

Comment balloon 2 commentsBill Morris • December 04 2009 09:42PM
Mortgage rates at record low.. for now
As I have blogged previously, mortgage interest rates are being held down for now by Fed purchases of mortgage-backed securities. That government-subsidized demand is holding bond prices up, and yields low. The average 30-year mortgage was priced… more
Gaining Momentum in Austin and Central Texas Home Markets
I have written frequently over the past year about the underlying strength of the Central Texas real estate market, and I have discussed Austin's relative economic strength with all of my clients for most of the past two years. Not only have we… more
New Short Sale Rules.. Good News?
This article hit the wire yesterday from Reuters: "The U. S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed "short sales" of homes and other loan modification alternatives to stem a rising… more
Don't Just Lowball.. Know Your Market!
As I have commented many times in many places over the past 12 to 18 months, discussing "averages" in real estate can be very deceptive. Articles about the record level of foreclosures in the United States can leave the impression that… more
Employment Strength in Texas and in Austin
Yesterday's Austin American-Statesman (Saturday, November 21) included two articles (in print but not online) on the subject of unemployment: [Central Texas] October jobless rate holds steady at 7. 2% and Jobless rates increase in 29 states in… more
A couple of great (old) quotes..
"Diligence is the mother of good luck. " -- Benjamin Franklin "Opportunity is missed by most people because it is dressed in overalls and looks like work. " -- Thomas Edison Coming from the… more
I am all for improvement, but..
Austin has long been among the most environmentally conscious, and active, cities in the country. That is part of what makes Austin Austin. An energy audit is required for all resale homes (1-4 family) at the time of sale, and new construction has… more
Thoreau.. thoughts for our business
Some prescriptions are timeless.. "If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours. " Henry David Thoreau more
This is SOOO Austin!
Austin has long been known for extended debates about environmental initiatives and development regulations. In the 80's there were actually new subdivisons where homeowners moved in and discovered that our "anti-growth" city council had… more
Austin-Area Foreclosures Up?
In an interesting contrast to my post a couple of days ago about an October dip in local foreclosures, the lead article in the Austin American-Statesman 's Saturday (11/14/09) Business section carried the headline: "Region's foreclosures jump… more