There was an interesting article on August 17 in the Housing Wire news publication that talks to the fact that mortgage applications increased at a rate of 4.1% for the week ending August 12.

I’ll give you a quick synopsis of what was said, and you can find the complete article here.

The article states that, as a result of the recent stock market plunge, interest rates fell to the lowest level since the 1950s as people pulled money out of equities and put them into bonds. Based on what happened last week, I too decided to refinance my home this week at a ridiculously low rate of 3.78%.

The significant drop allowed me to refinance my 30-year loan and convert it into a 15-year loan where I am basically paying about the same monthly amount, but now it will be paid off 10 years earlier. My total savings over the life of the loan will be a whopping $240,000!!!

These lower rates will also allow first-time buyers to qualify for a larger loan amount and buy a better house than what they may have been able to do just 30 days ago.

Home refinancing comprised of almost 79% of the loan applications last week; the average contract interest rate across the country fell to an average rate of 4.32% for a 30-year loan.

I would also suspect, that as a result of the stock market declines last week, home prices could dip, as an incentive for Buyers to buy now, rather than the seller risking a longer time on the market to sell their home.

July home sales dipped 3.4% in Marin. I have to add that July 2010 was one of the worst months we have in real estate, so the number of sales were already at a low basis to begin with. As sellers see lower activity in the market, they’re faced with having to reduce their prices to move homes that have been sitting on the market since spring.

If a buyer were thinking about selling versus renting, now would be a great time to buy. Rent prices in Marin have increased 6% over last year and the vacancy rates are at extremely low rate of about 2%. Rents will only continue to go up with these low vacancy rates, as it becomes a landlord’s market in getting higher lease rates.

Posted by:  Rick Smith