Good news today comes out of the federal government – fed rate reduced by 50 basis points and Congress proposes an increase in FHA’s insurable levels. The bad news – foreclosures are up significantly.
INTEREST RATES – The Federal Reserve Board’s half-point (or 50 basis points) cut in the fed rate, a key interest rate, yesterday surprised most analysts who expected a more modest quarter-point cut (25 basis points). The move should help homeowners with Adjustable Rate Mortgages and perhaps homebuyers considering an Adjustable Rate Mortgage.
MORTGAGES – The U.S. House on Tuesday approved a plan to expand Federal Housing Administration backing of mortgages. The measure, which exceeds limits favored by the Bush administration, is Congress’ first stand-alone bill that addresses current mortgage-market problems. The legislation is designed to increase the insured amount that FHA can insure to $500,000 in high cost areas from its present insurable level of $362,000. Although such a change would help in the California and Northeast real estate markets, it should also have a positive impact on the Naples, Bonita Springs, and Estero real estate markets as well.
Why did Congress move on this?
On Tuesday, research firm RealtyTrac Inc. said the number of foreclosure filings reported in the United States last month more than doubled compared with August 2006 and jumped 36 percent from July – a trend signaling that many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid the housing slump.
An estimated 2 million to 2.5 million adjustable-rate mortgages are scheduled to “reset” this year and next, jumping from low “teaser” rates for the first two or three years to much steeper rates that could cost borrowers their homes.
The wave of resets could crest during the presidential and congressional election campaigns next year, and the issue has brought politically charged debate in recent weeks over possible responses by the government. At the same time, turbulence in financial and credit markets resulting from the mortgage upheaval has cast a shadow over the economy and raised the specter of a possible recession.
It is going to take time for the sales to level off. I think if you and your buyers are choosy they can get some fairly good deals. I look for things that cannot be duplicated and concentrate on location. Things with views, certain waterfront, and the hard to fiind areas will be the first to come back. Some people just want to get out and the deals are there. Eric in New Orleans