Does it matter how low the interest rate sinks on home mortgages? In my opinion, NO. Rates have been at historic lows for the past couple of years and still, the housing market limps along.
Today on tour I was chatting with a well known local mortgage lender. He said he is 'crazy busy' right now...and 85% of his business is refinancing. When a homeowner refinances, no move is planned--just a little extra pocket change each month from a lower mortgage payment to keep up with rising gas and food prices.
What will get this housing market going is:
1) JOBS and JOB SECURITY. People have to feel confident that their jobs are stable, secure, with benefits, health insurance, and a decent wage. The consumer confidence will translate into more spending.
2) PRINCIPAL DEBT RELIEF for underwater homeowners. This is a tricky one--how, exactly, to provide such relief? Do you provide it just for the homeowners who want to sell? Or for everyone who's house isn't worth what the market will pay? I know many, many sellers who would like to move but can't--they are stuck with a house that's priced too high for today's market. Many sellers just want to 'break even'. The banks certainly don't want to take a loss on what they are owed. Being realistic, it could take several years for homes to regain the thousands of dollars lost in market value. Debt relief is a great idea; putting this idea into action is another story.
Still, for those buyers who are ready to buy....now is the time. You have the rare opportunity to take advantage of these low interest rates and rock bottom prices. Just be sure you buy in an area that is popular, desirable, with a good location. Keep your home well maintained and updated--there is always a market for those houses.