|Remember last week when I cautioned your buyers against waiting for prices to drop…because even with a lower price, a higher rate would actually cost them more money? Well, this week we are seeing higher rates because we are starting to see inflation and concerns over a double-dip recession have subsided. Remember mortgages are bonds, so when bond traders see inflation on the horizon, they raise the rate of return they require so that their profit is not eaten away by inflation.
What is causing all this? Three things:
First, as I said above, the fears of a double-dip recession have lessened.
Second, while the US economy is sputtering along, China, India and Brazil are all doing well. The increased demand from these emerging countries for commodities, food and oil pushes prices up.
Third, thanks to QE II (i.e. the Fed printing money, again) we are seeing a weaker US Dollar. The weaker dollar means we have to give global investors more return on U.S. bonds & mortgages to compete. The Fed is OK with this because a cheaper dollar ALSO makes our goods cheaper on the global market so that we can sell them overseas and boost our economy.
The USDA/Rural Development is available again. This is a GREAT program for your buyers that are looking in Rural Area’s because it has 100% financing with NO PMI or MIP.
The Oklahoma State Bond Money still has over 9 million dollars with a rate of 4.75% and 3.5% down payment assistance. If you are a buyer interested in down payment assistance then you need to locate a property quickly since it will have to close by the 17th of December to participate in this program.
In short…rates are headed up. This week 30 yr. fixed rates ranged between 4.125 & 4.375% depending on program, credit and points.
Sr. Loan Officer
NMLSR # 217991
OK License # MLO01963