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April 25th, 2011

Buyers: cash in on these conditions before competition returns

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falling ratesTwo weeks ago I suggested that homebuyers be ready to act swiftly if mortgage rates dipped, since most experts are predicting that rates will remain on an upward trend as we look forward. I hope you potential homebuyers out there were listening because mortgage rates did ease last week, and current market conditions have made things quite affordable.

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Yet still, despite the ripe conditions — historically-low mortgage rates, cheap home prices, plenty of inventory to choose from with very little competition — homebuyers are still sitting on the sidelines. It seems that these “ripe” conditions are what’s holding back the majority of the buying market.

Stay ahead of the pack

My advice from just two weeks ago — written in a post titled “Mortgage rates remain on upward trend; be ready to act fast” — holds true. If you’re a potential homebuyer, things are going to get a lot more difficult when mortgage rates rise, home prices begin to firm and other interested buyers begin to flood the market. That’s why acting now — when conditions remain this affordable (and subdued for that matter) — will keep you one step ahead of everyone else.

After holding steady for the last few weeks, mortgage rates declined last week, according to HSH.com:

HSH.com’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the overall average rate for 30-year fixed-rate mortgages declined by nine basis points (.09%) to slide to 5.09% A key component of the first-time homebuyer market, FHA-backed 30-year fixed-rate mortgages fell by a like amount, slipping backward to 4.74% for the week. Although there are of course future concerns, at least some borrowers should be considering hybrid 5/1 ARMs, which have an attractive initial interest rate averaging 3.71% this week, down almost an eighth percentage point from last week’s closing average.

Will mortgage rates rise this week?

I guess you could say it depends. If the economic reports due out this week show some improvement and if the fed expresses some added concerns regarding inflation, we could see rates tick back upwards.

To learn more, please continue reading our latest Market Trends Newsletter titled, “Mortgage rates ease, silent housing spring persists.” If you’re looking for a mortgage-rate forecast that looks some nine weeks into the future, be sure to check out our “Two month forecast for mortgage rates.”

HSH.com’s free Market Trends Newsletter, an in-depth analysis of various financial markets from the week prior, is published every Monday. Email subscribers receive it in their inbox Friday night, so sign up today

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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