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.

Steady Improvement
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 span.
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 corner.
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 Case-Shiller report.

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%

Standard & Poors Case-Shiller Index
Freddie Mac
National Association of Realtors

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713

Visit FirstCapital Online or call: 310-458-0010

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.