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RSS Feed4.5% Mortgage Interest Rates For San Ramon Valley Home Buyers? |
Dec. 11, 2008
Categorized in: The San Ramon Valley Economy
Earlier this week it was reported that Treasury Secretary Paulson is considering moves that could result in mortgage interest rates being made available to home buyers as low as 4.5%. The reason for this is to stimulate the economy as a whole and as so much of the economy is related to the housing market, this is obviously a good place to start. So how will this affect the depressed housing market? Let’s look at an example.
The current rate for a 30-year conventional fixed rate loan is approximately 5.75%. This results in a monthly mortgage payment of $2,334.30 for a $400,000 mortgage. At 4.5% on the same loan the payment would be $2,026.74, a saving of $307.56 per month which is not to be sneezed at. This reduced rate would allow many more buyers to qualify for a higher priced home at a lower payment and it would also allow many first-time buyers to afford a home who can’t do so at present. It is suggested that this could result in at least 500,000 more home sales in the short term.
It seems likely that if this does come to pass, then it would be for a set period of time (probably until the end of 2009) and this in itself would impart some sense of urgency. It is also probable that it would be just for home purchase, as opposed to re-financing, and limited to FHA conforming loan limits. Even so, such a move will get things moving again at the bottom end and the ripple effect will gradually be felt in all sectors of the market. This will be a great stimulus Mr Paulson. Let’s get on with it!
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