With a few real legislative policy changes, such as raising the conventional loan limit, we could see a significant boost to home sales, strengthen home prices and lessen foreclosures.
The National Association of REALTORS (NAR) is pushing for an increase from the $417,000 conventional loan limit to $625,000. This sounds dangerous at first glance. In reality, by making it easier for qualified home buyers to access lower interest rates on safe conforming mortgages, you will see more reasonable loan payments, thus increasing sales thus strengthening the market.
“NAR estimates that raising the GSE (Government-Sponsored Enterprise) loan limit will result in interest rates savings for an additional 330,000 home owners.”
–Lawrence Yun, NAR chief economist
Another push by NAR encourages the Fed to make a single large cut in the Fed funds rate to 3.5% rather than a series of modest cuts throughout the year. This cut would encourage more homebuyers to purchase now vs. continually waiting for a little better interest rate.
“Monetary policy will be much more effective with a one-time large cut, rather than a series of small cuts.”
–Lawrence Yun, NAR chief economist
The 30 year fixed-rate mortgage is expected to rise slowly to the 6.3 percent range by the end of 2008, but an additional cut in the Fed funds rate would lower short-term interest rates.
NAR is working hard to create change and help improve the housing market and I for one am thankful they exist and proud to be a member.
This entry was posted on Wednesday, January 9th, 2008 at 2:24 am and is filed under Housing Market, Mortgage, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.