Rates Ease – Oil Spill Effects

Mortgage rates have fallen back to some of their lowest levels of the year as investors have been returning to the U.S. bond market as continued worry over the debt problems facing Europe’s so-called PIIGS – Portugal, Ireland, Iceland, Greece and Spain- have caused a move away from risk to the relative safety of Treasury debt. Greece has been the biggest concern after Standard and Poors cut the nation’s debt quality rating to junk status. Failure by the EU member countries, all of whom are facing debt concerns of their own, to craft a viable bailout plan for Greece has fueled fears that the global economy may be facing long-term repercussions from deficits as a whole. Mortgage rates always seem to come out a winner when the economic news is bad and this week has been no exception. The benchmark thirty-year, fixed-rate stands right at 5.00% with no points and the fifteen-year is just under 4.50% at 4.375% with no points.

Though it is far too early to speculate as to whether we here in Bay County will see any effects of the Deepwater Horizon oil spill in the Gulf, I thought I would at least communicate what I am hearing from my customers since the majority of them are out of state condominium buyers. Though I have heard of one or two buyers walking away from their contracts and earnest money citing the oil spill, I do not believe there is, at this time, any negative correlation between the spill and our real estate market. As I told the Realtor who was relaying the story of the condo buyers walking I reminded him that buyer’s remorse has always been a factor and that I would not rule out a buyer using the spill as an excuse to walk away from a contract that he or she wished they had never signed. For my own part, since the spill was first announced I have seen no drop off in the number of calls from prospective condo and second-home buyers. Nor have I heard any concerns being expressed by customers who are under contract or who have recently closed. Basically, it is business as usual.

The deadline for the first-time homebuyer tax credit came and went Friday night at Midnight. Those not under contract by April 30th and closed by June 30th will have to hope that eventually another similar program comes along. If I were them I would not hold my breath. I have heard nothing from Washington even resembling an extension of the tax credit or any new program to take its place and, judging from the stronger than expected results found in recent housing reports, I doubt any are on the horizon. But with rates remaining at historically low levels and home prices staying extremely affordable, it is still not too late for first time homebuyers to benefit from this market.

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