BLOG: What a Great Time to Buy!

Yes, June 1 marked the day in which the 10-year bond yield went down to 1.44 percent, its lowest point ever. This was a historic moment. It caused mortgage interests to drop again, and this caused the national mortgage applications to increase by 19 percent on refinances and 13 percent on purchase transactions.

On Saturday, I notice a real estate Open House sign near my house. I wish we saw more of those. Four years ago the Open House signs were all over the place. What happened? Uncertainty is what happened. I just watched the movie Too Big to Fail. In my opinion, this movie should be mandatory for high school students.

The almost collapse of the financial markets in October of 2008 was not too long ago. But, you may say, nothing like that is happening right now so why don’t the banks loosen up their lending guidelines? The answer is that the impact of the losses from 2008 is still being felt today. Also, the uncertainty surrounding the European markets has investors concerned. This prompted investors to flock to more conservative investments, and of course we saw a decline in the stock market and a record-low 10-year bond.

Wow! Don’t I sound depressing? But wait, there is good news.

Anytime investors are uncertain and invest in conservative bonds, it is good news for mortgage rates--very good news as we saw two weeks ago. The mortgage rates are at historic lows. This makes it even better for those with enough money to purchase an investment/rental property. This is the time to refinance and/or purchase a home. Home values have come down but now show signs of being stable. 

Sunday, the presidential elections in Greece were held. There is uncertainty as to whether the country will remain a part of the European Union. If Greece leaves the union, it will send a signal that other countries may also leave the EU, and this could have serious negative effects on world markets. This, and not-so-positive news about our economy, will keep global investors feeling conservative and mortgage rates low.

So if you were waiting for lower rates … they are here. Summer is also here and I do expect these lower mortgage interest rates to influence the purchase market positively. I also expect to see as many Open House signs out there as I did four years ago.