Financial Crisis Has Impact on Interest Rates and Real Estate Purchases

This week saw the U.S. financial crisis spread internationally. With all the volatility and uncertainty in the worlds markets, what has been the effect on interest rates and home purchases?

This week we have seen mortgage rates falling. Good news for consumers and businesses if they are able to get the loans. We continue to suffer a liquidity crisis around the world which has constrained lending.

Bankrate.com says of this week's interest rate activity: "The benchmark 30-year fixed-rate mortgage fell 22 basis points, to 6.19 percent, according to the Bankrate.com national survey of large lenders. The mortgages in this week's survey had an average total of 0.4 discount and origination points. One year ago, the mortgage index was 6.5 percent; four weeks ago, it was 6.15 percent... For much of this year, mortgage rates have been extremely volatile. Earlier this spring, it was not uncommon to hear stories of mortgage shoppers who received great quotes, only to discover the rates were no longer available a couple of hours later.

"The National Association of REALTORS® is reporting research that points to an increase in pending home sales in August and an increase in home loan applications.

Our opinion: Buyers are reacting positively to the low interest rates in combination with the lower home prices that exist in most U.S. markets. The Denver Metro market is also reflecting these same nationwide trends.

See our website http://www.coloradoprorealestate.com/ .

Congress Agrees on $700 Billion Bailout Deal

Members of the U.S. Congress announced early Monday morning, September 28th, that they reached an agreement to the $700 billion bailout of the financial markets. The House of Representatives is voting on the bill on Monday morning and the Senate is expected to vote on Wednesday. President Bush has expressed support for the bill.

After two weeks of turmoil in the worldwide financial markets, coupled with a strong resistance from main street Americans, Congress and the President have agreed to a structured bailout. Now it is time for the media pundits to wade through the details of the plan and explain how the taxpayer will be affected.

Of interest to most of our readers will be the positive and negative impacts to interest rates, mortgages and foreclosures. Many buyers and sellers of residential real estate have been frozen for the last week and reluctant to make a decision until more clarity is brought to the situation. Our commercial clients are continuing with their real estate plans, but watching the economic situation carefully.

Some of our clients who have been heavily invested in the stock market told us they were rapidly selling their stock out of the market for the last two weeks to invest in real estate. After seeing their holdings erode as the stock market declined they are ready to invest in the bargain real estate prices that exist in the Colorado market. See our website.