Lower Rates, But Will Buyers Come Out to Play? - Travis Egan, Lender, Lake Geneva Real Estate

I read an article today in the Washington Post that suggested the Treasury Department was working on a plan that would allow lenders to give mortgages at 4.5%. Now in fairness it sounds like they're still working on the details of the plan, but are interest rates the reason people aren't buying homes?

It's my belief the reason people aren't buying homes is a simple matter of jobs. Like will they have one in the coming months? None of my clients ever went into a home, hoping they would lose it in a foreclosure. Most clients think long and hard before buying a home. My realtor brethren will attest to this. They scrutinize everything. This is a good thing. The thing that will stop buyers dead in their tracks is the fear of losing their jobs. The last thing they want is to move in to their new home and in a short period of time have to move again because one or all of them lost their job.

Rates could go to zero percent on Wisconsin FHA mortgages. Home prices could be half of their tax value and people will not budge if they fear they will lose their jobs. When I talk with my clients their number one fear is losing their job. Interest rates and property values are much smaller concerns for them. They would rather rent until they know they weather the current financial storm ripping through this country.

I fear Secretary Paulson and his teams are once again looking for a simple answer to the current economic problems and I'm not sure this is it.

Travis Egan

Lender, Lake Geneva Real Estate