Wow! I been busy for the last few months. I closed escrow on 4 homes last month and just put 2 new properties on the market. Lots of people have been taking advantage of the drop in prices and the low-interest rates.

Below is a message from Narbik Karamian of BeneGroup, Inc. According to him interest rates are going up.

“Greetings:

Here is an interesting twist on interest rates: Interest rates today shot up another .25% from yesterday. The 30 year conforming loans (up to $417,000) hit 4.75% from 4.5% yesterday. The high balance conforming loans (between $417,000 & $729,750) hit 5% today from 4.75% yesterday. This is a significant increase in one day. This is a new record for high balance loans exceeding the 5% mark. We have not seen 5% in quite some time now.

The rates looked very different in early November. On November 9, 2010, the 30 year conforming loan was at 3.875% and the high balance loan was at 4.25%. The biggest increases in interest rates happened on 11/16/2010 and today.

It is becoming apparent that interest rates are taking larger steps upward and much smaller steps downward.

The average mortgage payment for a borrower taking a $400,000 (within the conforming limit) mortgage at 3.875% would be $1881 versus a payment of $2087 ($206 more for the same loan amount) at the new 4.75% rate today. This also correlates into an additional $5500 annual income for the same borrower to qualify for the same loan amount now.

The average mortgage payment for a borrower taking a $700,000 (within the high-balance conforming limit) mortgage at 4.24% would be $3444 ($314 for the same loan amount) versus a payment of $3758 at the new 5% rate today. This also correlates into an additional $8500 annual income for the same borrower to qualify for the same loan amount now.

Investor opinion about the economy has been widely diverse this past one month. This is a strategy that is usually implemented by investors and lenders when they want to discourage lending activity until there is a better perspective of the direction the economy will take the market.

This shift in the market will further slow housing activity until early next year when the market adapts to a better interpretation of short-term economical data verses long-term data and outlook. These two have been the most contradictory in the past month.”

Best Regards,
Narbik Karamian
DRE Lic: 01372576
BeneGroup, Inc. A Premier Mortgage Brokerage and Real Estate Consulting Firm
Cell: (408) 315-2834 Fax: (408) 395-7561
http://www.narbik.com

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