The news on Wall Street last week certainly did very little to help consumer confidence, particularly with regard to the stock and housing markets. However, if there is any good news coming out of Lehman’s bankruptcy, Merrill’s purchase by Bank of America and AIG’s bailout, it’s this: the fixed 30-year mortgage interest rate came down last week to 5.65% with the 15-year fixed at 5.125%. According to a mortgage broker friend, these rates haven’t existed since 2005, when the 30-year fixed was at 5.88%. She also tells me you’d have to go back to June, 2000, to find the last time the rate on the 30-year fixed tumbled in one week. A year ago, the 30-year fixed was 6.24% and just four weeks ago, it held at 6.17%. The rates my friend quotes here apply only to 20-percent-down, full documentation loans, and as we all know, loan guidelines have become more difficult. However, for those who can, this is an excellent time to refinance, or better still, invest in real estate. While buyers may not likely invest heavily at the present time, I do think that investors will be doing their research to identify “good buys.” I recommend that current sellers revisit their pricing based on comparable sales in their markets, and that they reduce their pricing below their “competition, i.e. below the most recent comparable sales, not below the active market. If you are a seller and lowering your price is not an option, you may be better served by taking the house off the market until pricing strengthens again.
There is always a way to make the best out of a difficult situation.
