According to recent wire reports, the 30 year mortgage rate is now 3.56 percent, and 15 year mortgages, a good refinancing option are now down to 2.86%, a new record.
So why aren't people rushing out to buy houses with these great numbers? Well, first off, which houses would they buy. Existing homes that would a desirable step up are in many cases owned by people who are not ready to put their houses on the market until they appraise higher. Additionally, in order to buy a new house, those who would move up have to sell theirs, and while there are many potential first home buyers, those who started out with 80-97% mortgages may have negative equity in their homes, much less the funds available to pay for the real estate commissions and other selling expenses. Buyers continue to demand help with closing costs as well as continuing to push other transactional costs onto the seller to reduce their out of pocket expenses.
So, what must change? In my opinion, a conscious decision by those with enough equity to sell at a profit, no matter how small, to sell the home they are ready to leave, and go ahead and purchase their next home with a reasonable down payment from savings. This decision is not easily made with strict financial calculations, it is going to be about long term contentment.
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