Bad News For The Economy - Good News For Buyers and Sellers

Mortgage Rates Update - Friday, January 30, 2009

By pouring cash into Mortgage bonds, the Fed is giving us the best rates in years!  Is it time to consider buying a home or refinancing an existing mortgage?

ABSOLUTELY! 

Conventional 30 yr fixed as low as 5.25%

Conventional 15 yr fixed as low as 5.0%

FHA/VA 30 yr fixed as low as  5.0%

Jumbo 5/1 ARM as low as 6.0%

Current Rate Trend Direction: Lower

Risks favor:  Floating to take advantage of possibly lower rates

Another volatile day - Mortgage Bonds have already traded all over the board this morning, in response to fresh economic headlines.

This morning's 4th Quarter Gross Domestic Product (GDP) numbers showed the economy contracted by 3.8% and the slowest pace in 26 years.   However, this was actually better than the expected 5.5% contraction.   The economy has grown just 1.3% in the past year, the weakest growth rate since 2001. 

In other economic headlines, Consumer Sentiment arrived at 61.2, slightly lower than the expected 61.9 level.  The Chicago Purchasing Managers Index (PMI) for December was 33.3, also close but slightly under estimates of 34. 

US employment costs rose 0.5% in the 4th quarter, leaving employment costs in 2008 at the slowest pace in 26 years.  This is a result of rising unemployment rates keeping a lid on wage and benefit increases - in fact, many are seeing pay cuts and other benefits being slimmed down - and this is likely a trend that will continue in the coming months. 

Why? Fed's Buying Program

The Fed's buying program is driving down mortgage rates.  The Fed reported yesterday they had purchased  $16.8B in Mortgage Backed Securities from January 22 through January 28, with the majority being invested in FNMA 5 and 5.5% Bonds! 

What It Means To You - Buyers & Sellers

Buyers:  Rates are at historic lows.   If you want or plan to buy, call us at (404) 384-2274 for a referral to a mortgage lender who can help you qualify for a loan  and find the mortgage that fits your needs.

Sellers:  Lower mortgage rates mean that your home's sales price can rise.  Buyers can qualify for a loan more easily and for a higher loan amount, all other things equal.   If you want to sell, now is the time  - ahead of the Spring market.