What Are You Waiting For…Mortgage Rates To Go UP?

Did you know that from December 31, 2007 to December 31, 2008………..

The price of a barrel of Oil dropped from $95.98 to $44.60 or 53.5%. (1) 

The cost of a gallon of Gasoline in Chicago dropped from $3.21 to $1.83 or 43%. (2) 

The S&P 500 dropped from 1,468 to 932 or 36.5%. (1) 

Based upon the latest reliable data, which measures changes from November to November the home price index for Chicago dropped from 161.67 to 141.44 or 12.3%. (3)

The Price of a once of Gold actually rose from $833 to $875 or 5.0%. (1)

According to HUD, the Fair Market Rent of a 3 bedroom home

in Chicago rose from $1,154 to $1,227 or 6.3%. 

Finally, the average rate on a 30 Year Fixed dropped from 6.10% to 5.33% which meant that the P&I on a $200,000 loan dropped from$1,212 to $1,114 or 8.1% (4)

The first and last time the Chicago Home Price index was at 141.41 was in May 2004. So our prices haven’t moved for 4 1/2 years. But during the same period the S&P 500 dropped 16.9% from the 5/31/04 close of 1,121.

In fact the S&P 500 first hit 932 in August 1997. That is no gain in 11 years! By the way in August 2007 the Chicago Home Price Index was at 87.88 meaning that local home prices have risen some 60.9% more than the S&P 500 over the same period.

Now think about this: 

A home that was worth $228,570 in 2007 can be bought for $200,000 today.

With 20% down the loan amount would be reduced from $182,857 to $160,000.

Assuming Taxes and Insurance of $435 and the drop in rates from 6.10% to 5.33% and the monthly payment would drop from $1,543 to $1,326. That’s over $200.00 a month less! Or, buyers can take their chances on rentals becoming cheaper. See the BOLD type above!

Sources:

1. Worden.com market data feed.

2. AAA

3. Case-Shiller Home Pricing Indexs

4. Federal Reserve

John Houghtlin (Countrywide) 630-204-4408 Give me a call to refinance or purchase real estate.

This entry was posted on Tuesday, January 27th, 2009 at 11:50 pm and is filed under Foreclosure News . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.