NOTE: This is a time sensitive post.... dated March 19th, 2009
My Suntrust Lender, Sandy Madison is always upto date on the lastest. Below is information on recent events and how it may relate to your Charlottesville Real Estate Search:
Hot off the press:
On Wednesday the Federal Reserve announced their plan to purchase up to an additional $750 billion in mortgage backed securities, $100 billion from Fannie & Freddie plus $300 billion in long term U.S. Treasury Bonds.
The plan to purchase up to an additional $750 billion in MBS comes on the heels of the announcement earlier to purchase $500 billion in mortgage backed securities. The Fed has been the major player in the mortgage market over the past four three months which has been most influential in keeping rate low. Today the message was clear, "We are here to stay".
In our Market Update last week, we addressed the concern China's Premier had in the amount of U.S. debt his country had invested. His remarks, reflecting those of all global investors, were pointed directly at the economic leaders of our country looking for assurance that our government was fully committed to the long term. Today the response from the United States government was clear, "We are here to stay". Our eyes well with tears while chills run down our back when we witness our government speak to world with such conviction. We are truly thankful to live in this country.
Today's announcement was impetus both national and global investors needed as they quickly jumped on the opportunity to purchase mortgage backed securities and treasuries. The demand for these investments spiked driving the price up which in turn pushed the yield (interest rate) down. As the buying continued through the afternoon, interest rates plummeted to levels we have not seen. It is as simple as "When we have something you really want, we are going to make you pay more for it (bond price) and give you less in return (yield)".
How can this help:
Your current fence sitting buyers and potential buyers should be encouraged to get in the game quickly. Remember the motivation behind the Fed's actions is to aid the recovery of the real estate market and the sooner the better. A recovery will bring stability to home prices followed by an increase. Do you have buyers whose interest cooled because of home prices? As the combination of the initiatives our government has made begin to take hold, the prices today may not be available in the months ahead. If at the time the sales price was higher than desired, the lower rate may bring the payment within their desired range. Refer to example in our Market Update just two weeks ago comparing today's prices and last year's interest rates.
At the close of business Wednesday, your purchase client with a qualifying credit score putting 20% down could secure a conventional 30-Year Fixed rate at 4.375% with .500 points on a 30-day lock (APR: 4.454%).
