It seems that every week we see reports of mortgage rates hitting new lows – lower than the week before. As an example, check out these recent pieces (last thirty days) from the RGJ…
Mortgage rates hit new lows, but nobody cares
Mortgage rates fall to lowest level since 1950s, few qualify
Loan rates hit low – But few have resources to make down payment for mortgage
This week was no exception. This morning’s RGJ ran an Associated Press piece that stated fixed mortgage rates fell to the lowest level in six decades for the second straight week. In other words we’re now seeing the lowest rate seen since 1951.
So what are the current average rates? Thursday’s average rate on a 30-year fixed mortgage fell to 4.09 percent, down from 4.12 percent, and the average rate on a 15-year mortgage fell to 3.30 percent from 3.33 percent – the lowest rate ever for that mortgage option.
How low can they go?
MikeZ
4% fixed for 30 yrs!
People who finance/refinance at 4% will be sitting pretty 5-10 years from now. The forward-looking indicators point to an inflationary period ahead, just imagine having $200K at 4% fixed for 30 yrs when inflation is 8%, 10% or more, per year.
I’m starting to give serious consideration to those who think that when the housing recovery comes, it will be V-shaped (~10%/yr) , at least for the first year or two. There’s a lot of upward pressure on prices right now, such as these insanely low mortgage rates.
Lurker
Doesn’t matter how low they go. If you don’t have equity to refinance or cash to buy then you’re sitting on the sidelines.
Corolla
“there’s a lot of upward pressure on prices right now”
That must be why the median is down 17% from a year ago.
These dirt cheap rates have been around for two years now. A drop of .03 of a point is not going to matter diddly squat. Do you really think there have been millions of people sitting on the sidelines saying ” 3.33% is too rich for me, but once we get to 3.30%, I’m in”.
more_shill_talk
“There’s a lot of upward pressure on prices right now, such as these insanely low mortgage rates.”
And rising unemployment, and massive shadow inventory, and continuing new construction in foreclosureville (Somersett, D’Andrea, etc.), and declining population, and declining prices. Yeah, sure, upward pressure…
Grand Wazoo
Is there really no question now that MikeZ, who has repeatly declined to tell us what he does for a living, is not just another pump and dump realtor?
“Now is a great time to buy” ™.
Anonymous Coward
I think now is a pretty good time to buy, and it’s something I’m looking to do in Reno. But I don’t see prices shooting up anytime soon for the reasons already articulated by “Corolla” and “more_shill_talk”.
Normally I think MikeZ is much more reasonable than his detractors give him credit for, but 10% a year? Current prices may be lower than historical norms, but unless the Northern Nevada economy or inflation crank up at 10% a year, how the heck are prices going to shoot up at that rate? I suppose anything’s possible, but 10%/year inflation doesn’t seem like something to bet on.
MikeZ
That must be why the median is down 17% from a year ago.
No, that’s from downward pressure. The presence of upward pressure does not preclude downward pressure, nor does it mean that upward pressure is dominant. This is freshman year Economics, my friend.
MikeZ
But I don’t see prices shooting up anytime soon for the reasons already articulated by “Corolla” and “more_shill_talk”.
There’s a case to be made that when the economy begins a real recovery, home prices will rebound, briskly. Every major housing downturn/recovery has seen a sharp rebound plus Reno median prices are about 5-10% lower now than our median incomes support.
Is +10% per year for 1-2 years really that hard to believe? I don’t think so. There are a lot of us on the sidelines, fully qualified and ready to buy, even with ca$h, who are waiting for signs of a real economic recovery, before taking the plunge.
Wazoo… Well, it seems you’re still preoccupied with my line of work and my educational background (as if that matters). I would be happy to meet you for a beer or cup of coffee sometime in Reno to introduce myself and explain my line of work, and my educational background (I expect the same in return). Interested?
In fact, wasn’t there a RRB gathering some years back that Mike McG or Guy hosted? Is there another one planned?
Guy Johnson
MikeZ,
We’ve had a couple reader meet-ups in the past, but nothing for couple years now. The first meet up that Diane Cohn and I hosted at the Imperial brought out two or three readers of the blog. The second one was attended by five or six readers.
Anyone interested in having a RRB reader meet-up?
lurker
Yes. Don’t expect me to blow my cover and divulge my alias, though…. 😉
Norton
In the face of persistent 14% unemployment, persistent foreclosure activity (640 NODs last month), thousands and thousands of houses at some point on the road to becoming REOs, interest rates being at historical lows for the past two years, what factors suggest that the housing market is now about to take off on a Saturn V like trajectory?
Just wondering.
EdBear
We’ve played around with the thought of buying something in the Reno/Sparks area for several years. Over the weekend, we thought we might have something and, of course, contacted Guy.
He was great. Went to the property and unfortunately found that there would be no way we could fence our dogs in — a deal breaker.
Maybe someday… The property was really attractive and priced RIGHT.
Thanks Guy
Speedracer
@Edbear..curious where is the property?
MikeZ
Anyone interested in having a RRB reader meet-up?
I am. Anyone else?
I think it would be nice to put some faces and personalities to the aliases/names.
MikeZ
what factors suggest that the housing market is now about to take off
?? No one claimed the market is about to take off.
bob_c
the reader meet up could turn into a brawl with subtle (or overt) hostilities on this message board
another anonymous dude with no credibility
I think that concerns about inflation are very real. The Fed stating that it will keep interest rates locked in at extremely low rates clearly indicates that their goal is a mild and “controlled” environment of inflation. Yes, they want to keep loans flowing to stimulate business growth, but they know that the biggest problem on “main” street are sky-high debt levels due to the crash in home prices. One “remedy” for this is to encourage inflation, which would as a side effect, increase home prices. I used “prices” and not “value” because, as we know, the value can’t really increase in the market we have, with high unempoyment and loads of inventory. But home prices can certainly increase (along with bread prices, lettuce prices and gas prices).
In my opinion, while it might seem crazy to buy into this market, I have to agree that with such low interest rates (which we may never again see, once they’re gone) and such low home prices, buying a home isn’t a terrible hedge against what I feel is certain inflation ….especially in an environment where the stock market is a circus/casino, treasuries can’t beat inflation, and bonds run the risk of never being paid back at all.
EdBear
Hi Speed,
It was one of those cute Victorian townhouses by the lake downtown. Maybe it was called Victoria Crossings?