Well as expected last Friday, in the face of wonderful employment statistics indicating a continued economic improvement, mortgage rates rose. I’m still in shock that some people are up in arms about it! They went from 4.71% on a 30-yr fixed-rate mortgage to 4.81%. On a 15-yr fixed-rate mortgage the rates went from 4.27% to 4.32%. So, yes, they rose, but are still at historic lows and still lower than a year ago in the same month…

If the Federal Reserve stops buying mortgage-backed securities next March rates will rise, but it won’t be anything Earth shattering. If and when it occurs, rates will go up, however, reknowned financial observers state that it is most likely they will nominally increase, not rise exponentially. Keith Gumbinger, VP of HSH Associates, predicts that when the FED discontinues it’s intervention, it will bolster rates approximately 3/4 of a point for a 30-year conforming loan. He also predicts that at the end of 2010 rates will be somewhere around 6%.

Several real estate experts as well as financial experts contend that the Fed will more than likely continue it’s intervention as long as the housing market’s recovery is teetering…

That said, this is all conjecture. With rates at a record low, continued rate increases projected, home prices incredibly low, absorption rates improving, the extension and expansion of the First Time Home Buyer Tax Credit, and Builder/Seller incentive offers more creative and lucrative for buyers than ever, it truly is the best time to buy!

The continual correction and improvement of real estate trends will continue to fuel consumer confidence, and along with all of the above mentioned motivators, I think that a huge surge in real estate purchases will soon be upon us, and Middle Tennessee will continue to be an amazingly healthy and corrected market. The vast majority of homes that are continuing to sell with a lower absorption rate in Middle Tennessee are under $200k, with the majority of that price point subset that is selling being actually under $150k. It is going to be very interesting to see in mid-2010 how these lower price point absorption rates compiled with the extension and expansion of the Tax Credit to include those who are not first-timers will affect the broader spectrum and all of the price points.

For now though, let’s all take a deep breath and sigh…mortgage rates rose a whole tenth of a percent, but are still under 5%!!!!!!!!!!!!!!!! Amazing. Ok, call me and buy a house now lol.

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