Time To Buy

Tuesday, August 14, 2012

It’s Still a Buyer’s Market. Don’t Miss Out.
Once again, last month mortgage rates hit an all-time low. You’ve heard us say it before, and we’re saying it again: It’s a buyer’s market, with the perfect storm of low interest rates, low housing prices and a glut of properties on the market. But you’ve also heard us say that there is no predicting when that will change. Analysts are saying that the current dip is due to a strong bond market in the U.S.; a change in employment figures, continued low auto sales or trade imbalances could change those numbers quickly.
If you have buyers on the fence, or you have been considering ramping up your marketing to promote this buyer’s market to your community and garner new business, it’s a smart idea to move now before the economics change. Your business can only benefit by working with me to show buyers how the numbers are in their favor and giving them powerful purchasing power — which can’t last forever.
Taking Risks
Help your clients to look at it this way: putting off purchasing is putting their money at risk. If any of the three factors — rates, home prices, inventory — were to change, their purchasing power will begin to recede. That means they ultimately get less home for their money.
When it comes to locking a loan rate in, however, there are some conflicting schools of thought. One loan officer may counsel borrowers to float until they are 15 days from funding, no matter what. Another might tell them to lock quickly as rates change every day, plus many loans have re-lock options for a fee. If your clients are coming to you with these questions, we are happy to help. We can review recent rate trends and go over some scenarios with them so they are fully informed when they make the decision to move forward.
It’s also true that it’s much harder for potential homebuyers to qualify for a loan than it was only a few years ago. We have a wide variety of loan options to suit the needs of nearly every borrower. We can also provide some information on maintaining a good credit score* and can discuss their overall financial health when we get together to review their financing options.
How Did We Get Here?
This market arose from a series of factors coming together in the right way at the right time. When the U.S. entered this recent serious depression, the Fed lowered the federal funds rate. This is the interest rate at which banks and other lenders lend to each other. The federal funds rate impacts all other rates. When the economy is depressed, lowering the rate will make credit cheaper and more available to more people, hopefully spurring spending. The Federal Reserve has kept the rate very low, which has made mortgage rates, a form of credit, remain very low.
But when we enter a real recovery — when the economy shows signs of recovering that are substantial and sustained — the Federal Reserve will start to increase the federal funds rate, and home financing loan rates will also rise.
The Time Is Now
It’s a cliché, but it’s also a truism: the numbers don’t lie. It is highly unlikely that we’ll see this perfect storm of opportunity again, as the economy changes and so does the housing market. It’s time to get your prospective buyers moving and to drum up even more business on the back of this current housing market. Let’s discuss how we can help each other generate more business and assist our clients in making their homeownership dreams come true.

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