By: Michael Dormer, Independence Mortgage Services
Everett, WA
mdormer@independencemortgageservices.com

As we finish off the first month of a brand-new year, things are “looking up” for the U.S. economy … and, unfortunately, also for home loan interest rates. Most reports in January shows stronger than expected data and signs of a strong economy. This tends to be bad news for home loan rates, as on the heels of positive economic news, investors tend to pull money from safe-haven bonds and inject them into strocks, which have a better chance of profiting from the U.S. economy. Overall, home loan rates worsened about 0.125% across the board.

That’s the bad news. Here’s the good news: With most benchmark rates still in the High 5’s and Low 6’s, we are still experiencing record lows in the history of residential mortgage interest rates, and despite the “Doom and Gloom” spin that the media places on the slowdown from last year, all current economic indicators point to this year – 2007 – being an outstanding time to purchase in the Pacific Northwest.

Let’s break this down a little. On the economic front, the New Home Sales report for January came in better than expectations, and Existing Home Sales also enjoyed an improved pace of inventory. Looking at last year, 2006 represented the third-best existing home sale market on record. But the media spins the story by making a buxx about the steep drop from 2005 to 2006, and the fact that sales haven’t fallen off this much year-over-year since the early 1980’s. But some important considerations: First, 2006 is coming off a record year in 2005, so to see a drop-off in record levels is not unexpected. Second, the media is comparing the drop in year-over-year sales to the early 1980’s – but in 1982, the national unemployment rate was 9.7%, which is more than double the current unemployment rate. Many experts believe that we will look back at August 2006 as being the rock bottom of the housing market.

So what does this mean to you? As the Pacific Northwest continues to record housing appreciation well above the national average, and interest rates remain low while the economy slowly recovers, today’s homeowner can remain confident in securing a favorable sales price for their home, and a readily available supply of qualified buyers. For those looking to dip their toes into homeownership for the first time, there is no better time than the present to take advantage of attractive financing options and buy a home in time to enjoy the accelerated equity that will build in your new home.

Labels: economy, equity, mortgage, rates