Orlando Mortgage Blog

Stronger than expected Housing numbers; What's traditional on rates anymore?

March 17th, 2009 4:49 PM by BILL WILBANKS

Just a couple comments today:

Housing starts were up 22% in February (and yes it was a warm February). That would be a lot more positive if it weren't heavily influenced by an emphasis on multifamily/apartment starts weighing on the number. Apparently apartment living is back on the hit list. I don't know if that is due to affordability or risk aversion. Applications for building permits actually rose by 3% at an annual rate of 547,000. Pretty good considering they were generally expected to fall to a 500,000 run rate. Pretty bad if you are trying to sell your home and they're still building more to compete with you, huh?

For years it's been more or less generalized, and I've had to drop that word from my vocabulary, that a person could expect the 30 year fixed rate to be about 1.50% above the 10 year treasury yield. Well today the 10 year is loping around 3%, so you might expect to see the 30 year fixed around 4.50% par +/-, right? Wrong. Right now and in the recent weeks it's been running around 2%+ above putting us around 5.00% or higher depending on the assumptions used, which is still much better than the 2.50%+ over the 10 year it had been running at for quite some time in prior months. As hard as the Feds are working to get rates lower, it's not happening yet. But, if you had offered me a 5% fixed rate in 1974 when I bought my first home, I'd have been ecstatic. I got a 7.25% rate then and that was 35 years ago. Rates aren't the problem. It's perception as much as anything today folks. Normally when rates go down home prices go up. Today they're both down. If you are looking to buy a home...what a deal!

BILL WILBANKS

 

 

 

Posted in:General
Posted by BILL WILBANKS on March 17th, 2009 4:49 PM

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