Thursday, December 4, 2008

4.5% Mortgage Rates?

Apparently the treasury department is weighing action to lower mortgage rates to 4.5% in an effort to jump start the housing market, with a few restrictions of course.

As I heard the proposal this morning, it would be for new loans only, not refinancing.

Would 4.5% cause anybody out there to buy now in Portland? Even knowing you'd likely lose money if you had to sell in less than 2-3 years?

Thanks to eln for the link.

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7 comments:

Anonymous said...

I'm holding out until the new administration comes in and mandates a mortgage rate cut down to 0.1%. Woo-hoo!

PDX Outsider said...

Just as long as you're not holding your breath...

patient renter said...

An overpriced home @ 4.5% is still an overpriced home.

White Salamander said...

Since I'm looking for a long term residence the lower interest rate would help to nudge me towards buying a house in Portland. But I'm in my lease until July so still time to let those prices drop even more.

BB said...

@ White Salamander:

If you're hell bent on BUYING when your lease is up this summer. Great. Go for it. Good luck to you.
If you stay 10+ years no worries.

BUT

I'd bet you my next 4 paychecks that if you rented for another 12-24 months you'd buy the SAME house for about 2/3 of what you'd pay if you bought this coming summer.

Think LOOOONG and hard before you sign on that line. If you're paying cash -it doesn't matter.

BUT

Taking on debt headed into the early innings of a deflationary spiral is setting your personal finances up for rip your face off kind of financial pain.

If you've ever known ANYONE old enough to have lived through this country's last deflationary spiral (1929-1933) -they all have one thing in common. They all have a STAUNCH opposition to DEBT!
Debt CRUSHES those who owe it in periods of strong and protracted periods of deflation. That's the dark side of debt.

Avoid it like the plague. Save the money you'd put down + pay monthly to buy, pay MUCH less in rent, and pay cash from the savings at a later date and at a lower price.

If the house you intend to buy can be rented in the same area for roughly 100x the monthly rent -buy it. If buying costs you something like 200x the monthly cost to rent or more -THINK TWICE!!!!

It's only YOUR $$$$$$

White Salamander said...

BB,

Thanks for the wise advice. I wouldn't say that I'm "hell bent" on buying when the lease is up this summer but that I'd be open to it if the right opportunity presented itself.

I agree with you absolutely on debt. We have no debt right now. All of our cars are paid for, no credit cards, and so on.

We have just of 30k saved right now for a down payment. Right now we pay %1,000 a month for a 2 bedroom 900 square feet rowhouse Aloha. I was hoping to be able to find something in the $150,000 range by summer but we'll see where the prices are come summer. I won't buy something if I can't comfortably afford it.

Thanks again for wisdom and warning.

Anonymous said...

I can't buy until I sell my house. I agree....wait until after summer!