2009 Mortgage Interest Rate Predictions!
April 6, 2009 by Jim Walberg · 19 Comments
We currently have the lowest mortgage rates in recorded U.S. history. Is it time for Buyers to take action? YES! Jim Walberg’s conversation with Michael Tacconi.
Two days ago I sat down with one of the key loan officers in the East Bay, Michael Taconni, and had a discussion about what is happening with interest rates in 2009 and when should Buyers take action. It was a very interesting discussion. Here were three of the questions I presented to Michael to address.
When should home Buyers consider buying a home in 2009? Michael’s immediate answer was NOW! He said that Buyers have never had better home mortgage rates (YouTube) to chose from than right now – April 2009! 
Never in all the years of recording mortgage interest rates have they been so low. The mortgage options available are all in this same category – from five year and seven year adjustable rate mortgages, to 30 year fixed mortgages. He told me that the huge amount of activity of home purchases and refinancing that has hit his firm in the last few weeks has been like a “sumami”.
Will mortgage interest come down further in 2009? Michael’s take on this question was an emphatic NO! He let me know that the Fed rate is between ZERO and .25% (YouTube). He said that there is no further room for it to go down further. Again, the mortgage interest rates have never been as low as today in U.S. history!!! So I followed it up with the next logical question…
Will mortgage rates go up in 2009 and when? He was just as emphatic with his answer to this question – YES, and soon! He gave me some indicators that Buyers need to pay attention to (YouTube). The first one was watching the stock market and see if the March 2009 rally was actually going to be sustainable. If it continues to rally, those that are currently invested heavily in bonds will start moving back into the stocks. He referred to a blog that Elizabeth Weintraub posted late last year titled, Top 10 Real Estate Predictions For 2009. Here were her predictions for mortgage rates.
“Because mortgage rates are influenced by mortgage bonds and mortgage-backed securities, not fed rate cuts, I predict interest rates could rise to 7% in 2009. Maybe more if investors continue to worry about inflation and the government adds a new supply of U.S. Treasuries to the market to offset the looming deficit.”
Michael believes that these record low mortgage rates may not last longer than a month or six weeks at the most. The Federal stimulus package is starting to be felt in a very positive manner throughout the economy. As the consumer confidence begins to change direction, the stock market will continue it’s climb and rates will certainly go up. He even felt it will be a dramatic interest rate climb that will leave many Buyers in the dust who are waiting for a better time to buy. TODAY is the day to contact your mortgage professional, and your Realtor if you want to purchase a home in 2009. Contact me today if you would like to talk about you needs further.
Related posts:
- 2010 East Bay Real Estate Update: Mortgage Interest Rates Rising In Q2, Q3, Q4!
- 2009 Mortgages Have Found Their “Sweet Spot”!
- East Bay Real Estate: Jim Walberg’s 2011 Real Estate Predictions!
Filed Under: Blog, Buyers, News, Real Estate
Tagged: 2009 Mortgage Interest rate predictions, east bay real estate, Fanny Mae, Freddy Mac, Jim Walberg, Michael Tacconi
Jim,
Had a great time speaking with you the other day.
Thanks
Mike
I have to agree with Michael in that these interest rates will not be around forever and if a buyer is in the market, NOW is the time.
Hey Michael…thanks for taking the time to sit down with me last week and discuss this critical topic that our Buyers are focused on right now. Hopefully, this information will allow them to understand the urgency to buy now if they are thinking of a purchase in 2009.
Thanks for checking in, Danny. Yes, you are correct about NOW being the time to buyer real estate. Contact me if I can be of any assistance with your family or friends.
Jim – My thoughts are far from what you quote from Michael. I think we will not hit 7% in 2009 and maybe until the 3rd quarter of 2010. There is no reason to believe that Fannie and Freddie mortgage interest rates will climb at the rate you quoted. There are thousands of foreclosures now and still coming as the Option ARM recasts hit starting this month through the next year and 1/2. Unemployment is on the rise at an alarming rate and not expected to get better until business starts building back up again from their now “wait and see” attitude. That buildup will not happen also until commercial lending comes back to the businesses so that they CAN grow.
In fact we are starting to see jumbo rates in the 5.25% range for loans up to 1.5 mil. on 5/1 ARMs as the lenders start coming back into that market. We will start to see more lenders coming into the jumbo market as they realized that we are probably close to the bottom and they realize that the more stringent lending requirements show that there is less risk.
I understand why it is advisable to print “get it now before it is gone” advice but I believe we will have a nice run of purchases and refinances coming throughout 2009 with low interest rates. Recessions average about 20 – 22 months and we are only in around the 17 month mark so we even have issues there about a turnaround.
Just my thoughts to add to your quiver so that you can shoot straight arrows. Michael is a bright guy and his training and information come from some of the same sources as mine so I am surprised at the quotes that you attribute to him.
Thanks David, for checking in on this topic. I welcome your point of view and the details that you have provided as to why you believe that Mike’s viewpoint is off the mark. I am sure others will be checking in that will have other viewpoints. Stay tuned.
The Market will correct the Market
If one looks at previous financial crisis, one sees that they generally last longer than one year.
Great Depression 1929-1941
Japanese banking crisis 1990-1999
S&L crisis 1986-1995
Asian Banking crisis 1998-2000
Banking crisis 2007-…
It takes time to work them out.
People who are accustomed to instant meals, instant internet access, traffic light sensors, or movies-on-demand tend to forget these things.
Now is the time to buy a home. The market is changing over night and the reports below will illustrate that. There is 3 months of inventory in Alameda and 2.6 months in Contra Costa.
Contra Costa http://www.slideshare.net/mtacconi/months-supply-of-inventory
Alameda http://www.slideshare.net/mtacconi/months-supply-of-inventory-1260553
The Recession may last till the 3rd quarter of 2010 but we will have inflationary pressures along with sellers market.
Now is the time to buy and rates are below 5%.
So, Michael…it appears there two completely different opinions as to how the mortgage rates are going to unfold in the next nine months. My bet is that Buyers need to action NOW, but I have been wrong before, much to your surprise. Until next time…
David…any further comments.
I don’t disagree that this is great time to buy. Especially for first time home buyers with the tax credits. With that written, I still do not see, from the original point, 7% on Fannie and Freddie loans, in 2009. Inflation is a worry for the Fed but, I personally believe that the other factors will outweigh. I predict that I will still be writing 5.5% or better rates in August for conforming loans of $417,000 and below which is what is traditionally measured weekly by Freddie Mac. According to Freddie Mac, we have not seen 7% since March of 2002.
We will just have to wait and see. Just for the record, I like long dinners with someone that I care a lot about. At my age, I want them to last as long as they can:-)
So, David…what is the deal with, “…the long dinners with someone that I care a lot about. At my age, I want them to last as long as they can.” Is this referring to something in my posting? Until next time….
Well – I did not understand his – “People who are accustomed to instant meals, instant internet access, traffic light sensors, or movies-on-demand tend to forget these things.” I just responded that I take my time. No big deal. Fun enough!
Thanks for the clarification. At may age there are times when I can’t keep up with your humor. Enjoy your day.
I just read an article on Yahoo! Finance that was titled, “Mortgage Rates May Fall to 4.2% By Each of Year: Economist” This was based on analysis using trends on the Merrill Lynch Proprietary House Market Index. The summary comment was, “The expected fall in the mortgage rate offsets the expected increase in continuing clais, suggesting that the environment for home sales will improve over the remainder of the year. However, sales are expected to remain sluggish and may not be sufficient to absorb the inflow of the supply of foreclosures still coming…” In conclusion they stated that, “A bottoming in housing still remains elusive, and unemployment rates increasing to over 10% could hamper a recovery.”
So, a completely different opinion that what has been commented on by Michael and David. Any more thoughts?
Where are we now?
Well rates for a 30 year fixed at $417,000 and below are sitting at 5.25% (5/1 ARMS are at 4.375%) today with one of our major lenders. We had a blip in the market on May 27th due to an overload with the lenders and an enormous amount of loans put into the market with no buyers for that volume. Lenders have now caught up and rates have gone back to “normal”. I still predict I will be locking loans at 5.5% and below in August.
We are in interesting times and foreign investors in our debt (mortgage backed securities) have not been as strong as in our history but we still are one of the best and consistent investments available for the world market.
This is still a great time to buy for anyone looking for a good deal. Interest rates will continue to fluctuate and may even go back down to the middle to high 4% range if the market stumbles again but even at 5.25% those are some of the lowest rates in our history.
Hey David…thanks for checking in again with your mortgage update. YES…Buyers who are planning to make a purchase this year need to act NOW! Great interest rates, a good selection of homes to choose from, and prices that are still adjusted to the 2003 price levels makes this a perfect time to buy. As the year unfolds other factors are expected to increase mortgage rates by the end of the year. So…BUY!
Jim – I just saw a comment that you made on Facebook while you were writing a story and remembered back about the predictions of 7% mortgage interest rates by the end of the year. I am still locking in rates at 4.75% on “conforming” loans, so my suspicion is that 7% is still out there somewhere in the future but not before the end of the year. The Fed has slowed their buying of our own mortgage backed securities (kinda like robbing Peter to pay Paul) but still will be buying through the first quarter of 2010. When they either run out of our money or some of the insanity starts coming to a halt, we will see interest rate rises. I suspect though we will end up 2010 in the 6(s) – middle to high but no 7% unless you are talking about the hard to get jumbo loans.
Let’s revisit this at the end of 2010 and see where we are…
This is still a great time to buy real estate so keep on buyin’
Dave Walden