Decreased Florida Home Mortgage Rates Should Open Up Market
Looking to make an offer on a new house? This may be the ideal time.
Florida home mortgage rates have a direct impact on monthly payments - the lower the rate, the lower the payment - and, therefore, on how much home a buyer can afford. Ellen Bitton, founder of the Park Avenue Mortgage Group, says today’s lower fixed-rate mortgages have the potential to lift the market because markets often run on emotion.
“[Lower rates] make people more optimistic,” says Bitton. “The markets may not go all gangbusters again, but overall, they’re good for the business.”
Florida mortgage rates affect buyers
Joel Rassman, the chief financial officer for homebuilder Toll Brothers, agrees the lower interest rates have a “positive effect on the psychology of buyers.” He also points out there is significant pent-up national and Florida home mortgage demand for housing that low interest rates could help free up.
Of course, the impact on falling interest rates will depend on the market. Dianne Saatchi, vice president with the Corcoran Group, a New York based real estate broker, thinks declining rates will have little impact on her buyers.
“The mortgage rates never got very high. They’re still, looking at the last 30 years, outrageously low.”
Investment decline also affects Florida housing market
Allen Hardester, a senior executive with a Maryland-based lender, Hyland Financial Services, says even if rates do drop further, it may not be enough to offset another factor that was a feature of the boom: the decline of speculative investing. NAR reported that 40 percent of all home sales in 2005 were purchased primarily for investment (28 percent) or for second homes (12 percent).
Many of those speculators have stopped buying. Some have even put their properties on sale, helping to fuel the inventory glut (see chart). There were 3.9 million homes on the market in August, up 38 percent from a year earlier. This means that buyers have leverage to negotiate for lower prices after they talk to a Florida home mortgage broker (complete our FREE form).
In addition, interest on adjustable rate Florida mortgages, which added lots of fuel to some of the nation’s hottest housing regions, have not returned to the very low levels they hit in 2003, when a one-year ARM could be had for 3.40 percent, or less. That’s more than 2 percentage points below where they are now.
Neil Garfinkel, a real estate and banking law attorney with Abrams Garfinkel Margolis Bergson, LLP, says the current mortgage rates are merely keeping a tough real estate market from getting worse.
“I think that if anything has saved the market, it’s the low interest rates. Consumers have been gun shy. They hear about bubbles and what disaster is going to happen. If interest rates had shot through the roof it would have been a big problem.”
