What About Interest Rates?

What about them?  It seems to me that people have stopped paying attention.  Like everything in life that is plentiful or comes easy, we start to take things for granted.  Let’s face it – interest rates have been very favorable for the past couple of years.  A number of factors contribute to the current low rates: the slow economy, lack of inflation and US bonds still being considered a safe haven for investors seeking a conservative return on investment.

So why should anyone care that this week (July 1, 2010) RATES HIT THE LOWEST LEVEL SINCE 1971 when Freddie Mac began tracking rates on 30 year fixed mortgages?  Rates may stay low for the next 3 months, 6 months or maybe even a year – but eventually rates have to go up and when they do, the cost of home ownership will increase sharply.  For every 1% rise in rates, the payment on a $250,000 mortgage goes up $152.00 per month.  When rates go back up to 6.5%, which has been considered a very good rate historically, the payment on a 30 year fixed loan jumps from $1,267.00 to $1,571.00.  That is an increase in cost over a 10 year period of $36,480.

In life it is often said that success is in the timing.  For anyone considering buying a primary, vacation or investment property, now certainly seems to be an excellent time both property price wise and interest rate wise.

How low did rates go the week of 7/1/10? Mid 4% range and 15 year loans in the upper 3% range.  Contact Superior today to seize this historic opportunity.

Stephen M. Cors
CEO
Superior Mortgage Corp.

We are now almost a month past the end of the first quarter of 2010, and the only thing everyone can agree on regarding the state of the economy is that many experts disagree if we are in a real recovery or not. Housing sales including new home sales have made modest increases. This should be a good sign that housing is starting to recover, but many experts feel this is the direct result of the stimulus program providing tax credits for buyers ranging from $6,500 to $8,000. In addition, the Fed was buying mortgage backed securities (MBS) until the end of March. In all, the Federal Government bought 1.25 trillion dollars worth of securities to fund residential mortgage loans in the United States. Now the government has to decide what to do with this huge investment. Talk has already started about selling some of these securities to replenish much needed cash to our debt strapped Federal Government. This is a big concern to many who follow the bond markets. They believe if the Fed starts to sell MBS too soon or too fast, rates are likely to jump up causing an immediate slow down in the recovery. Combine that with the fact that the stimulus program for buyers is quickly coming to an end and many economists fear what looked like a recovery could come to a quick halt. I believe if the Fed acts cautiously in selling MBS and do not start before next year, which is Fed Chairman Bernanke's approach, the housing market will continue on a slow but steady recovery path. The slow pace of sales the last 2 1/2 years has created pent up demand. For most of the country, the decline in values is over and stabilization or even modest appreciation has begun. As the employment picture gets stronger, consumers will once again look to achieve the American Dream - only this time at great prices with sensible loans they can afford.

If you are in the market to buy or considering a refinance my advice would be to expect interest rates to be on the rise over the next year. That doesn't mean anyone should run out and buy a home that is not right for them or if it is not the best time to buy. Just be aware that the direction of rates is most likely up. If considering a refinance and you are certain you will be staying in the home for at least 2 to 3 years or have a good plan to use equity for something worthwhile, acting sooner rather than later will be to your benefit.

Stephen M. Cors
CEO
Superior Mortgage Corp.

As we enter into the second month of 2010 we are starting to see some positive signs returning to the purchase and refinance markets. The normal holiday slowdown started earlier in 2009, lasted longer, was affected by a bump up in rates in late December, and was compounded in most of the Northeast by severe Winter weather. Looking ahead we can see Spring in sight, which historically brings an increase in real estate sales.At Superior, our loan officers are reporting that they are very busy with new customers that want information on qualifying and current rates, which have trickled back down and are still very low when compared to rates over the past 25 years. The Federal Government's tax incentives for first time buyers and existing homeowners are still available for a few more months and home prices are more affordable today then they have been in five years. All this leads us to believe that the housing market recovery continues to make slow but steady progress. In fact, home prices in many areas are considered to be stable and some areas are starting to see the first signs of appreciation.

As most of us realize, the real estate market has always gone through cycles of appreciation followed by a period of flat or declining prices before prices begin to move up again. Even for seasoned veterans, this cycle is one of the most severe but still a cycle. At this point in time our hope is that the Federal Government, who controls most lending sources today, and the big banks recognize where we are in the cycle and stop tightening loan underwriting guidelines and realize that some loosening is needed. From talking to our contacts in the industry we are cautiously optimistic that this is happening.

In the meantime smart buyers will continue to enter the market. They will be helped by qualified realtors and honest lenders leading them to home ownership: one of the best investments the American family can make.

Stephen M. Cors

CEO

Superior Mortgage Corp.

The holiday season is a good time to stop and reflect on our blessings and accomplishments. This year has been especially challenging in the mortgage industry as federal and state governments try to figure out how to fix all that went wrong in our industry and the economy. The changes and new well intentioned (but often misguided) regulations along with all the other changes has had a major impact on how we conduct our business and what we will need to do to be successful in the future.

We continue to see positive signs in housing sales, stabilization of prices in many markets, continued low rates and unemployment rates that appear to be making a turn for the better. We are proud to be your trusted lender since 1987. We have stayed true to our ideals and accomplished growth in our business during these turbulent times. Most importantly we are thankful to our loyal customers and outstanding employees for the support they have provided to Superior Mortgage.

During the holidays, I hope your time will be spent with the spirit of giving, the importance of family and the excitement of new opportunity. We appreciate your continued trust and support. As we head into the New Year as committed partners to you, we wish to thank all of you for choosing to do business with us.