Aloha Friday,

The rates are very flat from last week and still super low!!! Wow. Can you believe how long we have been at rates under 5% for a 30 year fixed? This has to be some kind of record for sure. That brings me to the crux of the email this week; how long will rates stay down? As a daily watcher of CNBC, the minds on the bond market floor recognize the FED’s push to keep rates low, but also know that external pressure from investors will push rates higher. Who will win?

Almost half of our bond markets are made up of Foreign Investors including China, the Middle East, Europe and Russia. The push by these large investors for a stronger dollar will help to fuel rates upward, hence driving up mortgage rates. The “street” seems to think we will start getting FED bumps in interest rates by the second or third quarter of 2010. If Wall Street thinks that is even remotely possible, they will start driving rates up quickly.

What does this mean to you? For each 1% raise in rate on $100,000 the payment goes up by $59. So, for a $300,000 loan the payment rises by $177. Is that the end of the world? By no means, but, it will prohibit some first time buyers from moving forward and may keep a buyer with a $700,000 loan amount from moving up ($413 per month).

We are witnessing one of the best buyers markets in history. There is limited inventory for sure, but, the goal right now is just to get into a home. Fixing it up later is easy once you are in. Getting homes at these prices and rates may never happen again.

As we enter this last business week of the year I want to personally thank you for your continued business and support. We enjoy working with you very much and are so blessed to work not only in the greatest industry in the greatest land, but with super people like you.

I hope you have a very Happy Holiday and New Year.
 

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