Mortgage Rate Rally Continues

Turning a Corner??

Mortgage rates barreled lower a second straight day today, dropping from 5 5/8% to 5 3/8% for thirty year loans.

That brings the two-day drop to almost a full point, roughly equivalent to a 1,000 point rally in the Dow Jones average — which, not coincidentally, is what the stock market gained the last few days.

While it’s true that lower rates don’t help homeowners with negative equity or wrecked credit, they’re a boon for millions of other Americans.

Consider who benefits:

–Virtually overnight, prospective home buyers have 10% more purchasing power.
–Home sellers suddenly have a bigger pool of buyers who can afford their home.
–Existing homeowners with mortgages above 6% can refinance, using the savings to buy other things. In turn, strengthened consumer demand helps bolster an economy in recession.
–Banks and loan officers have a wave of new business to accommodate (I’d much rather see banks make money the usual way — making loans — than need bailout money from taxpayers).

Thanksgiving, indeed.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.
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