The Real Estate Mango

Very Low Mortgage Rates May Be Coming!

Today, December 4, 2008, the Washington Post reports some fabulous news for the real estate industry. The Treasury Dept. is considering a plan to intervene directly in the mortgage industry to force down rates and stimulate the market.

In this plan, the Treasury would offer to buy securities that finance newly issued loans for home sales. Mortgage lenders, under this plan, would have to set exceptionally low interest rates, for instance, no more than 4.5 percent for a 30 year fixed loan.

This would be a great incentive for buyers who look at properties but never bring themselves to buy, to be encouraged to buy right now and take advantage of a very low affordable rate.

If this passes, we should see many more real buyers who will make decisions quickly.

The savings are serious…for example…for a $250k loan made today, at the average interest rate of 5.625, on a 30 yr. fixed rate the monthly payment is $1439.14. The interest paid during the first year is $13,805.

If the new rate comes in at 4.5%, the monthly payment is $1266 and the first year’s interest is $10,998.

Most people live in their homes, 6 years and based on that, the interest saved would be about $18,000.

This is a rate that would be better than any in the past 50 years. Better than anyone’s parents ever had and with home prices falling here in Florida, this can be a chance of a lifetime to own a home.

This entry was posted on Friday, December 5th, 2008 at 9:44 am and is filed under Market Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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