As IB’R pointed out earlier this week, the bond market and the stock market are at odds over where the economy is headed. Bond rates are dropping; a sign of pessimism, while the stock market’s surging; buyers expect the economy to keep improving.
Only one group can be right but while waiting to see who is, the Wall Street Journal reports that mortgage rates have followed bonds down and 5% loans are available again. “The difference between 5 1/2% and 5%,” the article quotes one mortgage expert, “is shopping around.” I have no insight on whether the economy is truly on the mend or, rather, my guess is based on conservative fiscal thinking and could be wrong as likely as being correct, but a 5% fixed mortgage sounds attractive enough that would-be buyers hesitating on buying now might want to consider it. If they find a good value on a house, that is.
That’s the prediction here. I said the same thing to my pal Nancy just yesterday, when the Fed moves were announced. Of course, you want to make sure to get a fixed rate because after this drops rates to WWII levels, the elevator is going straight up, I fear.
But still, if rates go into the low 4s, that can’t hurt sales.
Bummer. But still cheap. Will they drop again? I sure don’t know – they experts said they would, but that was last week. GE’s down to twelve bucks and change today – not long ago, Warren Buffet thought it was a good buy at $16. Go figure.
Not necessarily, according to this WSJ article. Several readers’ comments point out that if buyers use the lower rates to buy more expensive houses than they otherwise could afford then they’re just setting themselves up for the next disaster. Still, if you used the extra money to buy a less expensive house in order to build your equity, that would seem to me to be a good thing.