Sacramento Real Estate Views

Sacramento Mortgage Rates

Long Term Mortgage Rates Hit All Time Low

According to Mortgage News Daily, mortgage rates have fallen for the 8th straight week with a new low average of 5.14% for a 30 year mortgage with less than a point paid.  That’s pretty low and a record since Freddie Mac began tracking this in 1971.  A check of the Freddie Mac Mortgage Survey confirms this as of December 24th.

On NPR yesterday morning, it was reported that there has been 48% jump in mortgage applications over the last week alone, the highest level in almost 5 years.

That’s good news for our local market or any market for that matter.  After the first of the year, there will be many more homes available for sale since the foreclosure moratoriums have been lifted by various entities both private and public.  Lower interest rates will help to keep inventories levels under control DEPENDING on the economy.  If the recession deepens into something worse, it won’t matter much what interest rates do as the unemployment situation will have worsened and even fewer people will be able to buy.

The Key

The key for our area is the loosening of lending standards from the current knee jerk standards to something that matches our marketplace.  It really doesn’t matter how low interest rates go if the banks refuse to repair section 1 pest damage and the lenders refuse to fund without it being repaired.  Right now, the all cash investors are having their way with the market as a disproportionate number of homes needing repair increases.  Government backed loans, FHA and VA, require that work to be completed and the banks don’t want to do it regardless of how much over the listing price the offer is to cover the cost of the repairs in some cases.

To some degree, I understand why the banks would chose that route.  Anything can happen when you open up a home to repair pest damage.  Even offering to credit back an amount to repair and the lender’s accepting an escrow hold back for new owner repairs to be completed within a 90 day time frame would be better than drawing a line in the sand and saying “no way”.  Allow the buyer to fix some of it themselves if that can be worked out.

I got an email recently from a prospective buyer recently that read like this:

“We are in pre-approved for 130000 at 5.5%.  Have 8000 in an IRA for down payment and 4000 in bank for closing. We have 2 little ones and prefer Placer county but are willing to look at some Sacramento. Schools are of big concern. Prefer 3 br 2ba but bath negotiable. We need someone with the inside track to help us get in before the darn investors come and steal it. Please help us find something that FHA will approve or likely approve and get us out of our $1375 rent payment!”

This is a actual quote from an email I received last week.  My heart goes out to these folks.  It’s tough out there.

Market Stalemate

If this scenario continues, our market recovery will be extended well past the 2010 time frame I’ve heard most experts tout as the turn around point.  Simply, we have people who are pre-approved and can’t purchase because the seller won’t fix the pest damage that exists in the home or the lender won’t fund the loan without the pest damage repaired.  While this situation is unique to the hardest hit states, these states also represent the most potential buying activity in the nation.

We’ll see what happens after January 20th, 2009 when we have a new president, hopefully new policies and at a minimum, some new hope!

Looking for a lender to help you get pre-approved to purchase?  Send me an email or give me a call.  I’m happy to help.  Click here.

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Tags: mortgage, sacramento real estate

This entry was posted on Thursday, December 25th, 2008 at 4:42 pm and is filed under Mortgage Information, Real Estate Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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