Rates to 4.625%, Will builders be the next demise?

Well, on Friday I did receive confirmation from Santa that I have been good….rates were 4.625% on a 30 year fixed. (They were 4.5% for about an hour). This is for purchases. Refinances are a bit higher, so additional quotes apply. My feeling is that this WILL spark the interest of home buyers, and that activity in the new year will be renewed, and that it will spark the activity the government is hoping for. Why are rates so low? Who cares…take it for what it is, if I can be so blunt.

What else can I write about this week? I already hit the climax…the rates! Should I write about the deal that almost didn’t close because the appraisal was almost denied for high land/value ratio, or the builder we had to deny for a construction loan (a well known one at that)….. I better not. It’s too negative! But I will summarize to only say that things are tight. Banks are tight because they can be. But wasn’t it this way 7 or 8 years ago? Yes it was, but who can remember back that far? I surely cannot.


I would like to address builders. I predict that this is the next industry to be really affected by our economic downturn (recession!). In fact they already are. Track builders mostly, who build specs. But custom builders too. They are being squeezed , and in some cases cut off, by banks . The strong builders are surviving, and are being required to put more equity in deals. Gone are the days of 100% cost lending. So, in turn, builders with inventory worried . They cannot get more lines to build more homes. Many will unfortunately go under. Spec lending is on hold with many banks, including ours. The banks just don’t want the risk. So I sit here and think what this could mean for consumers: (a) Good deals on new construction (b) less inventory , and that will cause inventory homes to be more expensive. (c) less new homes, for now. ONLY MY PREDICTION that has no merit other than my own.

hope you are enjoying the holidays! Have a great week, and keep saying your prayers. Its working. Oh, by the way, the 30 and 15 fixed being the SAME is not a typo…….strange, but true.