As a Real Estate Professional, I complete a number of Continuing Education hours every year or every other year.
Last week, the instructor spoke of using metaphors and stories to make your point.
With mortgage rates, there seems to be no shortage of metaphors.
To me, the best one right now is that of a flat tire.
Hard to move forward
I use the Flat Tire for the following reasons.
First, rates are flat.
They continue to remain around 4%.
Yesterday they were up slightly, but they continue to move only slightly up or down.
The situation in Europe
keeps
some volatility in the
atmosphere,
but no one I speak to in the mortgage business is willing to stake a position about rates beginning to ascend (or drop).
Like the overall economy, there is uncertainty.
This “could once again push investors back into the US Dollar and US Bonds,”
which would drive rates down.
However, no one believes that there is going to be a seismic shift.
Second, without some air in the tires (the economy), rates do not seem to be going anywhere soon.
Certainly, the biggest piece of news- which happened yesterday-
is that the lending limits for “JUMBO” loans, will again be up to $729,000 in New York City, which could help explain why my phone hasn’t stopped ringing for the last 2-3 weeks.
I think that the 4th quarter may not be as bad as people are predicting.
Currently, any loans over $625,000 will not be bought by Fannie Mae or Freddie Mac, so they must remain on a lender’s books.
I think that lenders would step in if the limit stayed here, and the Wall Street Journal is complaining about the Housing Lobby in today’s paper.
However, having the limits go back up to $729,000 helps the 2-bedroom buyers in New York City, which really drives much of the volume I am seeing in the market right now.
The noise in the media seems to be all about
the Eurozone- don’t you like my photo of the bicycle?
Maybe
there will be a tipping point here and bicycles and bike lanes will get the respect they
deserve here.
Drama in Greece continues,
now Italy, whose Bonds yields have spiked.
Generally, if weak economic news
causes money to flow out of Stocks and into Bonds, it will help Bonds and home loan rates improve.
We continue to bump along with these low rates- and until a pattern emerges, the rates, despite being low, are not necessarily helping drive buyers to purchases.
A flat tire doesn’t have to be a bad thing.
Stopping while you get your tires filled gives you a chance to enjoy what’s around you, before you scoot off in search of new adventure.
With that in mind, Happy thanksgiving next week!
-S