How Low Can It Go?
6/29/2013 4:49:33 PM

Interest rates for home loans have fallen to a record low. The last time they were this low, poodle skirts, Elvis Presley and "Bonanza” were all the rage.

A 30-year fixed-rate mortgage averages 3.67 percent, according to Freddie Mac, one of the nation's largest backers of mortgage securities. Last year at this time, it was 4.49 percent.

The interest rate for a 15-year mortgage, a popular choice for refinancing, is also plummeting. It is now at 2.94 percent.

"This is great news for potential new homeowners,” said ______________________ with First National Bank DeRidder. "Because the interest rate is low, the monthly note drops and people can afford to buy a bigger home or a home with more amenities.”

The drop in interest rates is attributed to the still-sluggish U.S. economy. "The employment numbers haven't made a significant improvement at this point,” said ___________. "Interest rates drop so that as more people refinance, or buy homes at a low interest rate, they have more money to spend, since they are paying less interest on their loans. This helps boost the economy.”

As the rates continue to fall, though, some potential buyers are wary that the value of their newly purchased home will erode.

Not so, say two famous and wealthy businessmen: Donald Trump and Warren Buffet. Trump recently stated on CNBC that housing "is one of the great investments right now. When people ask me what to do, I tell them ‘Go buy a house.'” Buffet said that if he had a way to manage them, he would buy a couple of hundred-thousand single-family homes and rent them out.

Real estate may be a solid investment, but what about the family who isn't looking to turn around and sell? The family who wants to make a home out of the brick and mortar? Should they wait longer and see if rates continue to drop?

Real estate experts predict that rates will likely continue to drop, but much like the stock market, you can't time the real estate market. If a family finds a home they like and can afford the note, now is a great time to buy.

"You have to look at our local housing market, not just the national trends,” said ______________. "Nationally, real estate is still in a slump. Locally, we have a solid foundation, our economy is stable with growth expected in the near future and our housing market is good. If you were already in the market for a home, you're getting a record-low interest rate.

Home pricing will probably remain low for several months, maybe longer; but historically, it has always rebounded—good news for would-be homeowners or those looking to refinance.

For more information on home loans or refinancing, contact First Nationanl Bank DeRidder at 463-6231 in DeRidder or their mortgage loan office in Lake Charles at 477-6693.

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Categories: Finances

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