The top red line is the 30 year mortgage rates and the yellow line similar to it is the 10 year treasury rates. As I said yesterday, the 10 year treasury is a good indicator of the 30 year rates. However, you can see that in the last few months there was an inverse relationship between the two that I think is from the lenders beginning to compensate for all of their losses from foreclosures. That has settled down a bit and the end result will be that the 10 year and 30 year rates will still be closely paralleled but with a larger spread between them.
You can see the 10 year is within 50 basis points (1/2 a percent) of it's 15 year low. And the 30 year mortgage rate is within 100 basis points (1%) of it's 15 year low (if the graph were updated to the changes we've seen in the last week, you would see it is within 50 basis points now).
New home starts have dropped faster than they have in 15 years and are the lowest they have been in 9 years. And median home prices just made the sharpest decline we've seen in 15 years.
We may not be at the absolute "bottom" yet, but I am certain we are seeing signs that we are close. Once we start to rebound is usually when you see the signs that we WERE at bottom a few months ago. A lot of the builders I have talked to felt that this spring will be the turning point, but now they are saying the end of 2008 (after the election). Either way, I am comfortable buying now for the long term.
Whatever you do, I hope you are +EV.
Stay patient...
4 comments:
I totally agree and have made some moves myself. I am even thinking to roll both my home loans (ARM and equity loan) into a 30 fixed at 5.35% - Yahoooooooo!
I'm so glad we're in a 30yr fixed at 5%. We've been paying extra - almost enough to bring it down to 15 years - for quite some time.
I'd hate to be somebody who squeezed into something just a little too big with an ARM.
We built and bought our house 2 years ago. The interest rate is just a little lower now than it was then, I think it was right at 6%.
I tell you, when we were shopping for morgages, they were sure pushing the ARMs. Guess they are getting what they had coming to them.
You can only raise big so many times before someone finally calls and you sit there with your pants down.
I am coming to the end of year 5 of my 5/1 ARM (3.75% for the last 5 years - woohoo!). It looks like the timing is just about perfect for me to refi back into a fixed.
Even though the adjustment will still keep me at a good rate thanks to the annual cap, that's just for one more year, and who knows what one year will do. With rates back near historical lows at the right time, it looks like my bet on the 5/1 paid.
I would certainly be interested in hearing your opinionion though Jamy.
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