I hope everyone had a great holiday season and are adjusting well to returning to real life and work again. I’ve returned to work with incredible news for the new year. The Federal Government has started it’s $500 Billion purchase of Mortgage Backed Securities (MBS) which has spurred interest by investors in Mortgage Bonds and has driven the rates even lower than last week (which were pretty dang good). Analysts are saying that we could see some record low rates over the next three months.
In other news, the Board of Realtors has released November’s data for home sales in Utah. Sales overall in November were lower than November of 2007 and 74% of homes sold in Salt Lake City and surrounding areas were below $300,000. I feel this goes back to my theory that since there is no more stated income loans and borrowers must be able to document income and assets, that is all the majority of Utah borrowers can qualify for.
For instance, according to the Census Bureau’s income data (which is collected from the IRS) the median household income (the amount that 1/2 of people make less than and half make more than) is Utah is about $62,000 a year. This would qualify half of Utahan’s for a home of $243,000 or less.
This number is probably skewed a bit too, since those that sign the front of checks don’t report their income the same way as those who sign the back. Many business owners do not W-2 themselves, but rather file a Schedule C or K in which they work hard to minimize their taxable income by writing-off as much as they can, so their true take-home income from being a business owner is usually way understated. In reality they can afford a $500,000 home (or more), but they can only on paper prove they qualify for a home in the $300,000 price range or less.
So until HUD (who oversees lending guidelines for FHA, Fannie Mae and Freddie Mac) changes their guidelines for calculating self-employment income, I think we are going to see much of the same, with homes under $300,000 selling quickly and those over $300,000 staying on the market for longer periods of time.
If you are looking to refinance a home or purchase a new home, right now is the time, though. Rates are truly as low as they’ve been in over five years, and definitely the lowest they’ll be for a while. So don’t delay. Call me for a no-charge review of your current mortgage and if refinancing will benefit you. Also, if you are looking at a home, call me for a mortgage quote or to get you pre-approved for the loan.
For Salt Lake City, UT today’s average mortgage rates are as follows:
30-year fixed: 4.75%
15-year fixed: 4.625%
Conforming Jumbo 30-year fixed: 5.125%
FHA 30-year fixed: 5.00%