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Wednesday, March 28, 2012
Home prices slide, mortgage rates increase
During the past several months there have been solid signs of economic
improvement. The housing sector is a critical component in most cities
throughout the United States. In the Los Angeles area it plays a vital role in
diversifying the region’s economy.
As expected, housing prices continue to decline, as indicated in the monthly
Case-Shiller Index, which was published earlier
today. The index is a key benchmark of housing data and has become the industry
standard in analyzing sale trends.
Supply & Demand
While reduced prices are good news for those in a position to buy, most must
secure a mortgage to complete the transaction. Interest rates have increased by
.500% month to month. While that figure does not trigger any alarms, it is
noteworthy because rates were well below 4.000% just several weeks ago.
The increase in rates is also another good sign of economic improvement, as
it’s a basic function of supply and demand. As the economy improves, rates will
increase. As the economy declines rates will reduce.
In the Los Angeles market, the standard 30 year Fixed Rate is currently averaging
4.290%. On a typical mortgage of $225,000, the principal and
interest payment would be $1,112.14. Compared to six years ago when the housing market erupted and
was in a free-fall, the same rate was 6.160%. The mortgage amount would yield a
monthly payment of $1,372.22, or a bottom-line difference of $260.08, per
month. Comparatively speaking, that’s over $18,000 over the time
It’s that type of analysis real estate professionals want you to focus on
because 2012 is far more positive than 2006.
As the first quarter is coming to an end, many are predicting robust activity
with the start of spring and the traditional home buying season right around the
As the economy continues to rebound and sales increase, mortgage rates are
forecast to remain favorable as buyers are trying to leverage their purchasing
power with some great deals which are still available, as documented by the
Aside from the analysis, rates and rates, and home prices are home prices.
There are numerous programs available to assist with purchasing or refinancing.
To key is to engage your real estate professional of what works best with your
budget and financial situation.
End of 1st Quarter Mortgage Interest Rate Comparison For traditional 30 year Mortgage
2012 – 4.290% (3.890% one month ago)
2011 – 4.840%
2010 - 4.970%
2009 - 5.000%
2008 - 5.970%
2007 - 6.160%
Sources Standard & Poors Case-Shiller Index Freddie Mac National Association of Realtors Bankrate.com
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