For more than two weeks, real estate professionals and financial experts have reported that both mortgage rates and real estate sales have fallen flat. One on hand, the fact that mortgage rates haven’t gone up is a good sign for buyers. Although lenders have made it more difficult for applicants with poor to average credit ratings to get mortgages, at least they won’t have to pay a higher price for their new homes. Unfortunately, the fact that home sales haven’t increased indicates that it is still a buyers market. Until sellers are able to get their asking costs, the backlog of homes will increase and values will continue to go down.
For a 30 year fix rate mortgage, home buyers will pay approximately 4.5% interest. Toward the beginning of the year, the fixed interest rate was as high as 5%, but since then it has steadily fallen. With home sales down by 3.8% overall, real estate professionals are far less optimistic about the future of the industry. The fact is that home are not being sold, so banks are trying to attract buyers by making the interest rate as low as possible. For people that have secure incomes, a moderate amount of savings and good credit rating, this strategy will get them to buy. However, there are millions of US citizens that have been laid off, foreclosed on, evicted or downsized. The cost of living is going up, and it will be a long time before the general public starts to find relief on any front.
