RATES ARE STILL LOW & LUXURY MARKETS ARE IMPROVING, TOO!

Dear Friends,

For those home buyers who could not tap into the federal tax credit before it expired on April 30th, they are finding comfort in the continued low mortgage rates, which by the way dropped again this week to near-record lows. According to Freddie Mac interest on 30-year fixed loans averaged 4.78 percent compared to 4.84 percent last week, while the 15-year rate slipped to a new low of 4.21 percent from 4.24 percent.

As previously reported, the favorable borrowing costs will improve affordability and offset the impact of the tax credit program ending. However, please keep in mind that rates will increase as our economy improves.
Signs of improving economic conditions could lead Federal Reserve Chair Ben Bernanke to raise key interest rates, driving up mortgage rates.  As the evidence shows, more consumers are paying their bills on time with both American Express and Target Corp. reported lower delinquency rates in two years during the second quarter.  In another sign of economic improvement, fewer banks reported tightening lending standards this month, which lends to the reason consumer borrowing rose for the second time in three months.

“If lending standards start to stabilize, that’ll be another reason to remove the emergency measures, including the zero rate,” says Jay Bryson, a senior global economist at Wells Fargo Securities LLC in Charlotte, N.C., who formerly worked at the Fed in Washington.  So after a tough 2009 and 2010, we are seeing solid evidence of the economic improvement, for example. The luxury home market is on the upswing. Sales are up 32 percent from the previous year of homes in price range of $2 million to $5 million in the first quarter and totaled 2,461.  Realistic selling price, increased buyer confidence, and improved financing options all contributed to the increased sales.

But as solid market improvements appear, there are still concerns.  Evidence shows that luxury homes are affected more by the movement of the stock market, and "if the markets don't recover soon, it will scare people and hurt demand for high-end homes," says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.

We are not out of the woods, but we are definitely doing better!  Make sure you have all the tools necessary to buy, sell or finance your next home.  Call me now, for a "Free Market Analysis" or to Short Sale Your Home at NO COST to You!  Happy Memorial Weekend and stop by Homes With My to begin your property or loan search now!

Namaste.