MORTGAGE RATES DROP, BUT BE CAUTIOUS: For the 5th time in 6 weeks, mortgage rates and pricing have dropped. The bond market ended the week 47 bps higher – pushing rates lower. The 30 year fixed par rate has dropped to 4.375%. 5/1 ARMs have dropped to 2.875%!!
But beware, there are signs that rates could have trouble this week. There is optimism that a deal working to help Greece with their debt issues will go through. This could mean trouble with the bond market, pushing rates higher.
THE DREADED DOUBLE DIP IN HOME VALUES: According the March S & P / Case Shiller Home Price Index, much of the nation is in the midst of a double dip in home values. After being down for a number of years, price levels rose recently driven by the Federal Tax credit for new home buyers.
Since the tax credit ended, prices have steadily dropped in most areas. Across the country, home values are down 4.2% over the 1st quarter of 2011, and 5.1% down since March of 2010. The average price of a home is now down to 2009 levels and if adjusted for inflation, down to 1999 levels.
I personally think this is a great market to buy a new home. Prices are low, rates are great. If you are looking to purchase a long term home, you can get on a 30 year fixed rate and ride out the fluctuations in the market. Is this the best market to have owned a home for a number of years? – I don’t think it could be much worse. Good news is many people can still refinance at up to 105% of what their home is worth and still get a great rate.
