I hate it when the media puts out headlines like, "Treasury mulls plan to lower mortgage rates to 4.5%." What exactly did they think homebuyers were going to do when they read those headlines?
Hey Treasury...here's a clue. When you tell people you're contemplating lowering interest rates a full percent or more, they stop looking at houses and wait for the new bounty.
Several agents I've spoken to in the last couple of days are telling me that their buyers are stopping for the time being and are just going to sit on the fence until more information comes out. With rates around 5.5% right now that's great, but a drop to 4.5% would be fantastic...for those that would qualify.
If the Treasury goes through with their plan it wouldn't help homeowners who are currently in trouble with their mortgages. This plan is designed only to bring new buyers into the marketplace. Refinancing wouldn't apply either.
Another problem is that there are no published guidelines as to who might qualify for the new rate of 4.5%, or how long the rate would be around. I can just see all the people with low or marginal credit calling agents and lenders wanting to take advantage of a 4.5% interest rate. All people hear are that rates are dropping, and they want to wait to take advantage. It's human nature. If it does happen at all, there are going to be a lot of disappointed people who don't qualify for the new rates.
Hopefully, the Treasury will make their decision soon and publicize it so that homebuyers can get on with their lives.
Richard Iarossi, REALTOR®
Long and Foster® Real Estate, Inc.
Crofton, MD 21114
410-451-6255 Office
443-995-9595 Cell
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Annapolis MD Real Estate Specialist
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Rich Iarossi is a full time licensed REALTOR®, working in Crofton, MD. My coverage areas are: Anne Arundel, Prince George’s, Howard, Calvert, Queen Anne, and Baltimore City and County. I specialize in residential real estate, working with both buyers and sellers. Use the registration free search on my website at www.RichSellsHomes.com. If you’re not already working with a REALTOR®...I can help. Call me at 443-995-9595 (Cell) or 410-451-6255 (Office).
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Hi Richard I thought the same thing when I heard of the pending drop in interest rate. Between the media and the Treasury our jobs sure are fun........................aren't they? Tie our hands behind our backs.....do they realize what they do to us a professional....they put us all in limbo....that's what?
Hi Richard, me too! But, then again this whole mess could have been avoided if the media would just quit reporting on the bad stuff. When is the last time we read about something good in the news?
June, Buyers are very confused right now and the government just keeps piling it on.
And therein lies the problem: the specifics have not been decided but the "news" is released to the public. It seems to be a little irresponsible. What have the policy makers done to help keep people in their homes? I haven't yet seen a viable solution. All I see is CEO's & CFO's walking away from failing companies with millions of dollars.
Makes you just want to go to Washington and grab them by the freaking collar and shake em'.
They are bailing out the AWU and AIG CEOs and throwing our entire industry under the bus.
You are so right. I have several buyers who have been on the fence for months. And every time they start to get ready something else stops them - just like this has. Remember when the nightly news led with the price of gas every night. Now that the price of gas is good news - it doesn't even make the last page of the paper. Fun times in deed!
...geri
Richard,
I do not think this would really shift the market one way or the other, and I do not think this can break our back. A lot of things are happening now, more than usually, and it is difficult to predict how the market will react.
You are absolutely right about this! All this soothsaying has buyers and sellers swiming in cicles and the rest of us sitting around doing nothing - or close to it. It's the ultimate in iresponsible.
June P., It reminds me of the plane lands safely at airport story...you'll never see it in the news.
Maria, When the specifics do come out I don't believe that it will be all that helpful to a lot of people.
Tammy, I live in the area, I'm going to take the Metro down on Monday :)
Geri, Some buyers will never get off the fence but right now a lot more are getting on to wait and see.
Jon, I agree, I don't think it's going to matter that much but right now the lack of information is causing buyers to adopt a wait and see attitude.
Jennifer, Lately, the media hasn't been reporting very responsibly in many areas.
I don't think many people will qualify for these new 4.5% rates. I think its rather deceiving the way the media makes it sound like everybody will get these rates by default.
Justin, My fear exactly. The devil is always in the details.
Richard, I am a lender and my phone rang off the hook to get 4.5%. I hadn't even seen the report and I was getting calls with in minutes. You are right. All the people last week that were ready to lock at a great rate want to wait. What happened? The jobs report came out and rates went up three times in one day! Crazy!!!!!!!! Rates are still good but 4.5% will be with 740 plus fico.
I executed a contract today and am expecting another offer tomorrow, have 2 closings next week, had 1 closing last week and 3 the week before. The buyers are off the fence here and have been for a while.
Rick, Lenders are going to be doing a lot of explaining in the next week or so.
Julie, I had a settlement last week and two more this month too but all of those were locked well before the announcement that rates might be dropping again. In my opinion buyers never get too far from getting back on the fence when they hear rates are dropping again.
No kidding! It seems the more the folks in Washington try to help the more they screw things up.
kk
Kristal, Yep, and we keep re-electing them too.
LOL yep I had several buyers quit looking in person and deciding to get back on the fence with this news. Do what you are going to do. Dont give pie in the sky maybes.
Were you reading my thoughts Thursday and Friday???
I had 7 calls from people wanting to know if the 4.5 was here now. And if not, then they'll wait until it arrives.
I so do not get it !!!
The housing market is not in trouble because of loans people will get in the future, we are in trouble because of existing loans. wouldn't it be logical to help the people who are in short sale or foreclosure right now so we can stop the decline in home values? If this 4.5% interest rate for NEW mortgages is approved, a lot of sellers with a 7.5% loan will stop making payments and go for a short sale. They will feel that they are punished instead of helped and our home values will rop even more.
I had someone hold off on locking in because of this news. Funny thing is they are looking at a jumbo and this is not targeted for them.....thanks to the media again.....
Merry Christmas!
your friend in Charlottesville!
I wish someone would put a muzzle on the media. They have done way more harm than good. Buyers aren't buying because they are either scared, waiting for the bottom or anticipating a better deal....it's sad that the media has so much control over people and their decisions.
Laura, Lets hope that whatever is going to happen happens quickly.
Kris, Real estate agents are good...but reading minds, that's the easiest thing we do. Keep in touch with them and grab them back when the news finally comes out accurately.
Anne, I don't believe that we know all of the downside ramifications of what the government ever attempts to do.
Charles, First, Merry Christmas. From what little we know the 4.5% rates are going to be pretty restrictive. Some people are going to lose good buys making a bad decision.
Melissa, The media has done a lot to hurt the market in so many ways. No accountability either.
Rich..
I agree. Dangling this carrot may get them moving, but it won't get them to closing. This could be a real problem.
Richard, I'm concerned that this will add to the confusion. Many buyers don't really understand that there are always restrictions on who can get the best rates. All they see is 4.5% and think it applies to everyone.
Ok sure it makes things tougher... but you know every day there are sales...EVERY DAY. So quit getting too wroked up over something you can't control and get worked up over getting a piece of the pie... if some one sold a house why was that not YOU? In the two weeks that rates have been in the mid 5's I wrote two deals... focus and work and keep a good attitude. This last week EVERY day I was also showing. It is a good life!
Perrin, I know there are sales every day and I have my fair share. I'm not too worked up but I also don't stick my head in the sand about the true market conditions. That type of media headline does nothing to help the industry.
Richard,
It is not that much what we do now that changes the market. You start giving the loans for 1% and it does not mean that the market will heat up. This is simply not realistic. It is like to try to warm up a cold day a candle
So true. Sometimes I think that the media, or the Powers That Be who announce some of this stuff, don't have a clue.