Mortgage watch: Interest rates move up

On March 31st an event occurred that could affect home buying and re-fi’s in the near future.  It was inevitable.  An event that most everyone has been waiting on for some time….the Federal government has ceased purchasing mortgage backed securities in the open market…Since 2007 the Fed has purchased 1.25 trillion dollars of these loans.  That’s Trillion with a “T.”

Here in San Diego (and everywhere else) those Fed actions have helped keep interest rates low and stimulated buying (and re-financing) while the real estate market bottomed out over the last 3 years. For a beleaguered San Diego real estate market, that was one of the few bright spots – the low interest rates for qualified borrowers.  Even if you weren’t a home buyer, if you were one of the lucky (or smart) ones, you may have refinanced your loan during this time and you may have gotten a 30 year fixed mortgage at or near 4 ¼ % — again, for qualified borrowers.

Well, those days are most likely gone for some time.  Interest rates began inching up toward the end of March and are still creeping up at this time.  It’s still a great time to be a buyer in San Diego.  Home prices appear to have bounced off of their bottom and right now it looks like conditions are favorable for a little spring selling bump.  And in spite of the upward creep, mortgage rates are still low.

These conditions look to prevail for the near future.  The concern of course is rising interest rates due to inflation but all signs point to a slow economic recovery especially in the all important category of employment.  Without healthy employment there can be no inflationary pressure for goods and services and interest rates are likely to remain low.  These conditions can’t last forever though.  As employment picks up during the recovery it is likely that interest rates will increase as well.  What does it all mean?…that right now is a good time to be a buyer in San Diego.

Tax Credits are Winding Down

In an effort to stimulate the U.S. housing market and address the economic challenges facing our nation Congress had passed new legislation that provided tax credits of $6,500 to current property owners and $8,000 to first time buyers. This ends on April 30, 2010 and appears will not be extended.

We feel this is a stimulus package that needs to stay in place. We still see everyday how the San Diego housing industry is suffering. The San Diego housing industry is one of the leading driving forces behind a recovering economy. The industry needs all the help it can get to clear all of the foreclosures and short sales from the market.

As people buy homes in San Diego, whether new or old, they immediately begin the spending process getting them fixed up. They buy new windows, window coverings, decorative items and furniture. They hire contractors to remodel kitchens and baths. They get new roofs installed. Bottom line, every time a San Diego home sale takes place the economy gets a boost within many industries. San Diego needs this continued economic boost to get us back on the road to a full recovery.

If you believe like we do and want to see this home buyer tax credits remain in place please contact your Congressman to let them know. If our San Diego area Congressman hears from enough of us they will listen. Don’t procrastinate, the sooner we get a ground swell going the better chance we have at getting an extension of the current programs or the implementation of some new programs.

We are here to help you still take advantage of the current programs before they expire. The programs are written so that all you have to do is have a home under contract before April 30, 2010. We then have until July 1, 2010 to actually consummate the sale. It’s not too late, give Floyd or Larry a call toll free at 877-269-1814. We have the tools and the knowledge of the San Diego real estate market and current financing programs to still make it happen for you and we welcome the opportunity.