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2012-05-21 13:19:50
Record LOW Rates and Current Inventory

Interest rates have FALLEN to NEW HISTORICAL LOWS!


Mortgage interest rates have taken a steep dive in the past two weeks to set new historical lows; and here is why:

 

If you aren't already aware, mortgage rate trends tend to be connected to the stock market/economy. When the economy is doing well, generally the stock market is increasing and mortgage interest rates are increasing. In a healthy market, investors are able to get a higher return on their investments, thus driving mortgage interest rates up to entice investors to invest in mortgage securities instead of the stock market.

 

But when the stock market is hurting, like it was last week, interest rates drop as investors are looking for a safer, more guaranteed investment, even if the return isn't the greatest. With the beat down the stock market has taken over the past two week, interest rates for mortgages has come crashing down to set new historic lows!

 

Rates for FHA and USDA Rural Development 30 year fixed loans are trending around 3.625%. That is 3.625%!! Conventional loans are also near those rates:

30 year FHA - 3.625%

15 year Conventional - 3.125%

30 year Conventional - 3.75%

30 year USDA Rural Development 3.625%

 

These rates are a HUGE DEAL!!

For every percentage point (1%) on a mortgage, monthly payments increase $83/month for every $100,000 that you borrow. So the difference between a 3.625% and a 4.625% interest rate on a $200,000 loan is an additional $167/month, or $2000/year, JUST IN INTEREST!!

 

The additional $167/month is the same as purchasing a home that is about $25,000 more expensive at current interest rates. In other words, mortgage payments would be about the same for a $225,000 mortgage at 3.75% interest as a $200,000 mortgage at 4.75% interest. 

 


Here is a graph which shows how much (approximately) interest rates affect monthly mortgage payments:

Loan Amount

3.625% interest (current rates)

4.25% interest (2010)

5% interest (2009)

6.25% interest (2002-2008)

8% interest (92-02)

$100k

$520

$560

$605

$690

$810

$120k

$630

$675

$730

$830

$970

$150k

$785

$840

$910

$1,030

$1,210

$200k

$1045

$1,120

$1,215

$1,375

$1,615

$300k

$1,575

$1,680

$1,820

$2,060

$2,420

Monthly payments are rough estimates of payments for low down payment loans with mortgage insurance (Rough estimates including Principle, Interest and Property taxes - .7% property taxes, 1% PMI and @2% MIP)

 

Here is an excellent article on CNN Money explaining these trends: http://money.cnn.com/2012/05/17/real_estate/mortgage-rates/index.htm

 

Here is a graph showing historical interest rates:

 Mortgage Interest Rate Trends Utah


Don't pass on this opportunity to purchase a home with historical low interest rates!! There will likely not be a better time to purchase a first home, an investment property, and/or upgrade to one's dream home! Buying is much cheaper than renting, and with the USDA Rural Development loan, a buyer wouldn't even need a down payment.


CURRENT INVENTORY


As mentioned in a previous email sent out last month, inventory is down for most Wasatch Front counties. See chart below.  In addition, due to an improved and very healthy Utah economy, and a result of new historic low interest rates, demand is dramatically increasing.

 

In the chart below, you will see that in general, less homes are being listed and more homes are being sold. Usually low supply coupled with high demand results in appreciation. But for several different reasons, appreciation hasn't kicked in quite yet in most areas.

 

Good deals seem to be on the market for less than a week, usually receiving an offer or two within 24 to 48 hours of hitting the market. The key to purchasing a home in this market is to be watching the market like a hawk and to be ready to make an offer quickly after finding a great new listing.

 

I spend the majority of my time working for my buyers performing multiple MLS searches for each buyer each day checking to see if any new listings had come on the market that matched my buyer's criteria. In addition, MyProvoHome.com will email new listings that match criteria directly to my registered buyers.

 

If you are ready to purchase, be sure to contact me and let me know your criteria so we can work together to snatch up a good deal on a new listing.    

 

Utah (whole state)

Normally 22,000-24,000 active listings (2011) - down to approx.14,000 with over one-quarter of inventory (5,200) under contract:

 

New Listings:

1/1/12 to 4/16/12 - 14,642              4/17/12 to 5/21/12 - 5,804

1/1/11 to 4/16/11 - 16,316               4/17/11 to 5/21/11 - 5,887

1/1/10 to 4/16/10 - 20,413             4/17/10 to 5/21/10 - 6,549

 

Sold Listings:

1/1/12 to 4/16/12 - 7,114                 4/17/12 to 5/21/12 - 2,957

1/1/11 to 4/16/11- 6,556                  4/17/11to 5/21/11 - 2,914

1/1/10 to 4/16/10 - 6,624                4/17/10 to 5/21/10 - 3,618

1/1/09 to 4/16/09 - 5,320               4/17/09 to 5/21/09 - 2,731

 

Utah County and Salt Lake County

 

New Listings:

1/1/12 to 4/16/12 - 8,396                4/17/12 to 5/21/12 - 3,297

1/1/11 to 4/16/11 - 9,472                 4/17/11 to 5/21/11 - 3,429

1/1/10 to 4/16/10 - 11,953              4/17/10 to 5/21/10 - 3,662

 

Sold Listings:

1/1/12 to 4/16/12 - 4,389                4/17/12 to 5/21/12 - 1,798

1/1/11 to 4/16/11 - 3,968                 4/17/11 to 5/21/11 - 1,754

1/1/10 to 4/16/10 - 3,975                4/17/10 to 5/21/10 - 2,229

1/1/09 to 4/16/09 - 3,117                4/17/109 to 5/21/09 - 1,690

 

 

 

 

 

 

 

 
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