Mortgage Rates at New Lows, Thanks to Europe's Debt Crisis

Here's some good news for the struggling US housing market: Thanks to the European debt crisis, mortgage rates are at historic lows.

The current average rate for a 30 year fixed loan is 4.87 percent, according to Bankrate.com. That's the lowest rate for the 30 years since Bankrate started keeping track 25 years ago.

Even jumbo loan rates-loans for more than $417,000-have fallen. The 30-year fixed jumbo loan is at an average rate of 4.5 percent, down from nearly 6 percent at this time last year.

"It's the best time in our generation to buy," says Mark Zandi, chief economist at Moody's. "It may be the best time in any generation. Mortgage rates are so low and with homes prices down and lots of inventory, you couldn't pick a better time to buy or re-finance."

Europe's debt crisis is behind the drop. Nervous investors are flocking to the security of US Treasurys, which pushes down their yield and influences a host of consumer interest rates-including those on mortgages.

The decline is also good news for homeowners looking to refinance, particularly those who owe more on their mortgage than their house is worth.

"There's a tremendous window on re-financing," says Greg McBride, chief economist at Bankrate.com. "That's particularly true for people who can take advantage of the government's Home Affordability Refinance Program (HARP)-which allows home owners to refinance into low mortgage interest rates even if they're property value has gone down."

HARP, which was due to end at the end of this June, now runs through June of 2011.

"Think of the benefits if you buy or refinance now," says McBride. "Locking in now at the lower rates means more more bang for the buck and more breathing room for homeowners when it comes to payments."

But the decline in rates probably won't last long, analysts say. So homeowners need to move fast.

"I think they won't last much longer than a month or two at the best," says Lawrence Yun, chief economist at the National Association of Realtors. "I can see them going up to 5.5 percent by the end of June if not sooner."

The reasons? Yun says the worries over Europe will be fading soon and investors will be looking at other assets besides US Treasurys. And there's the US deficit, which will push up Treasury yields.

"The US is fortunate now that there's no pressure on interest rates," Yun goes on to say. "But going forward, higher rates will be needed for financing the debt."

Zandi agrees. "Yes, I can't see these rates being this low in three to four weeks," Zandi says. "Investor's will settle down and this current crisis (Europe) will pass and the focus will be back on US debt. It's really a now or never type of proposition, when it comes to getting these types of historic rates."

Source: CNBC

THE DUBAI EXPERIENCE

THE DUBAI EXPERIENCE combined with the INTERNATIONAL PROPERTY SHOW FEB 15-17, 2009

The Fox Group, Keller Williams Gold Coast, Chicago, came to what was billed as the “World’s Largest Property Show” in a city which boasts the world’s largest man-made islands, some of the tallest residential and commercial buildings, many unique for their architectural flair, world’s largest shopping malls (one with an indoor ski “hill”), largest (under construction) international 14-runway airport, Dubai’s International Financial Center, Media & Internet Centers, whole new cities under construction, the iconic 7-star Burj Al Arab Resort, the opulent and architecturally relevant symbol of Dubai akin to the Eifel Tower in Paris and (under construction) ten lane highways! Yet the Dubai city traffic is often at a stand-still. But I digress.

As luck would have it, our own Mayor Daley was visiting Dubai and Abu Dhabi the same week our group - Natasha Ganzenko, Bob Satawake, Boris Pjanic and I, Tricia Fox, - ventured into this non-typical Mid-Eastern world. Furthermore the International Property Show was officially opened by the current ruler, the popular Sheikh Muhammad bin Rashid Al-Maktum (Sheikh Maktum), who strolled through the show without much obvious security, fanfare or entourage – we have pictures from standing two feet from him!

Only 15% of the population here are Emirati Nationals, English is the language of business, bartering along the Dubai Creek in open market souks is still symbolic of the basis for all transactions, however modern the exterior trappings may be. First impressions are: a Las Vegas on Steroids, no gambling; a Hollywood setting amid a Disney for Adults theme park surrounded by water and sand and the best infrastructure one can imagine.

Dubai is not the oil capital of the world. In fact, it was the recognition of a need to survive past oil income which drove the visionary Sheikh Zayed bin Sultan a-Nahyan to build this ultra-modern, business friendly world class city while still retaining the hidden charm of the small pearl-diving village replete with new Florida type mansions hugging the shores of the gulf. But I digress.

The Property Show was interesting, worthwhile, and a learning experience. The 20-50% local real estate downturn from prices of a year ago gave us reason to believe our more solid Chicago and Second Home real estate offerings would find interest from moneyed partners. We feel our contacts and inroads made in the week there will prove worthwhile over time. The improved world recognition of Chicago with the Obama connection and the Olympic possibility allowed us to tout our world class city and especially our strong property offerings. Our group certainly competed in presentation, professionalism and earnest enthusiasm. Half of the attendees were mid-eastern, the other half a mixture of European, Australian and Asian. We only met a handful of Americans. We quickly learned our American business methods of sale presentation and a deal on a handshake was out of sync with their cultural need to sit and talk and have a coffee and get to know you. After the first day, we created a sitting area within our booth to invite business people to sit and chat. And business increased ten-fold.

A learning experience for sure.

We have come home with interested investors from single family homes and condos in Chicago, Houston, and Florida up to possible investor groups interested in financing entire buildings. Worthwhile, to be sure. Now we need to continue the souk market barter process and continue the business development while having a coffee and a chat. We’ll keep you posted.
Our experience at the International Property Show was a successful beginning; we came home with newly inspired enthusiasm for global exposure for our local market and some enhanced tools for our next international adventure.

Local Expertise. Global Information and Reach.