Mortgage Rates Slide In September

After reaching 6.44 percent for 30-year, fixed-rate loans at the start of the September, mortgage rates generally retreated during the month. According to Freddie Mac, 30-year loans were priced at 5.98 percent by the end of September -- the first time rates fell below 6 percent since July. In both cases borrowers also paid .6 points.

Interest rates hit a low of 5.21 percent in June, according to Freddie Mac, and rose during much of the summer. However, even the highest summer rates were low when compared with the usual interest levels seen during the past several decades. One result: the National Association of Realtors reports that existing home sales in August rose 21.8 percent when compared with August 2002 -- and 2002 was a very good year for real estate.

For those who prefer adjustable-rate mortgages (ARMs), start rates below 4 percent were available at the end of September. The more liberal qualification standards associated with ARMs may allow borrowers to obtain larger loans, and thus obtain homes which would otherwise not be available with fixed-rate mortgages. The caution, of course, is that ARM rates and payments can change in the future.

Real Estate Gains $200 Billion -- In One Quarter

According to the Federal Reserve, the nation's real estate was valued at $15.4 trillion at the end of June -- up $200 billion from the first quarter and an impressive $3.9 trillion since 1999, an increase of almost 34 percent in just four years.

Not surprisingly, mortgage debt also increased. Home mortgages amounted to $6.44 trillion at the end of June, up from $4.53 trillion in 1999.

The generally lower mortgage rates seen during the past year mean buyers can borrow more with a given level of income. Also, as home values have risen owners have more ability to trade consumer debt for home equity mortgage loans. With home equity loans consumers in many cases have reduced overall interest costs, lowered total monthly payments and found larger tax deductions.

Alternatively, many people prefer no debt. The Fed figures show that real estate worth nearly $9 trillion is unmortgaged, an enormous store of wealth.

What happens locally and with individual properties may differ when compared with national pricing trends. For specifics, contact your broker for the latest community market data.

We're On The Move -- But Not Far

If you think you see a lot of moving vans passing through your area, you're right.

About 120 million (46 percent) of the nation's population age 5 years or older in 2000 lived in a different home than they did in 1995, according to the U.S. Census Bureau. Twenty-five percent moved within the same county, 10 percent between counties in the same state and 8 percent between states. Three percent moved here from abroad.

The Census figures confirm what real estate brokers have long known: As much as we like to move and move up, we like to move locally. According to the National Association of Realtors, in 2003 the median distance between a new residence and an old one was just 10 miles.

Old Phones ... And New Insurance

The recent battles with Hurricane Isabel and the Northeast power grid failure suggest that it's a good idea to keep a supply of emergency stores both at home and at the office.

In addition to items such as drinking water, food, blankets, batteries, and hand-powered radios, consumers might also want to store away old-style telephones, the ones which do not require electricity to operate. Even when electrical power is interrupted, such phones can work if telephone service is running. Why? Older phones are powered through phone lines and not the general electrical system.

One other suggestion: If you need better insurance coverage get it now. As a matter of practice, insurance companies will not begin or expand coverage in the face of oncoming storms and other sources of havoc.

For more articles by Peter G. Miller, please press here.

Published: September 30, 2003

Use of this article without permission is a violation of federal copyright laws.