Wednesday, August 10, 2011

The Latest Mortgage Information after this S&P downgrade. Part 2

The Latest Mortgage Information after this S&P downgrade Part 2, What does this mean to the current Real Estate market? I asked my friend and mortgage guru Jeffrey Arnstein Branch Manager of VanDyk Mortgage Corporation located in Tempe, Arizona this question and here is what he had to say. This is Part 2 to the question.

Much has happened in the past few months that have resulted in one of the most volatile and unpredictable periods of mortgage interest rate and price fluctuation.  But now their appears to be a solid trend to lower interest rates for quite some time to come.  I think! 

On the heels of the protracted debate in congress about the debt/budget situation and the uncertainty that went along with that debate, followed by an agreement that was signed by the President on August 2, 2011, followed by the surprise S & P downgrade of US debt from AAA to AA+, as well as Fannie and Freddie, followed by a sell off in the European markets prompted by fears among investors that some European Counties’ debt will be downgraded to “junk” – on August 9, 2011, the Federal Open Market Committee (“FOMC”) of the Federal reserve released their observations and plans for the future of the Federal Funds Rate, which is generally defined as the interest rate at which banks may borrow funds from the Federal Reserve.

The sum and substance of these remarks were as follows:

  • Unemployment has not improved;
  • Consumer spending and confidence has not increased;
  • Overall investment is weak;
  • Housing is still sluggish;
  • Economic recovery will go much slower than previously anticipated; and
  • Only small improvements in unemployment rates will be seen over the next several quarters.

Accordingly, to promote and strengthen the pace of recovery, the FOMC announced its intention to keep the Federal Funds Rate exceptionally low (between 0 and ¼ percent) through mid 2013.  I have personally never seen such a long term commitment to interest rate levels from the Fed, and I question whether or not there was some politics involved in issuing this statement.

Nevertheless, it would appear that the FOMC is intending to foster a lending environment to stimulate investment and thus the economy, which means lower rates across the board for the foreseeable future.  And this means that we should see low mortgage interest rates for at least another 6 months, if not longer.

And when I say low rates, I mean all time lows.

So, these all time record low interest rates, combined with all time lows in home prices, not only in metro Phoenix, but all over the country means housing has never been more affordable. 

I would caution those who still want to “wait to see” that even with these statements by the Fed, the economy is very unpredictable and mortgage rates may rise, despite the Fed’s best intention to keep them down for a myriad of reasons. 

It is my experience that when we try to “time the market”, we as consumers guess wrong and loose 90% of the time.  Therefore, take advantage of this “perfect storm” of price and rate now before this window closes.  Now is the time to contact your realtor to start the home buying process.  You will never get a better deal than you will right now.

And when you do find a home, we have a wide selection of mortgage products to suit your needs from FHA, VA, to conventional.  Many of these mortgage products involve little, if nothing down, and your realtor can generally negotiate a substantial contribution from the seller to cover most if not all of the closing costs.

For Mortgage Questions or needs contact Jeff Armstein or Real Estate Questions or Needs contact Joseph D'Ambrosio at the number below,

"Opening The Door To Opportunity and Your Future Home..."

Jeffrey Arnstein                            Joseph D'Ambrosio
Branch Manager                                         Executive Sales Associate
VanDyk Mortgage Corporation                 Keller Williams Northeast Reality
3923 S McClintock DR Suite 408              21410 N. 19th Ave #131
Tempe, AZ 85282                                       Phoenix, AZ, 85027
NMLS # 157746                                         Cell: 623-810-4824
AZ LO ID # 912005                                    Email:
BKBR 0115143                                          Website:
(480) 621-4542                                           Website:

No comments:

Post a Comment