Greek Tragedy Helps U.S. Mortgage Rates

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The current financial troubles in Europe are proving to be an unexpected blessing for U.S. homebuyers. With the value of the Euro steadily declining, large international investors are now putting their money into U.S. Treasury Bonds. The value of these bonds has a direct impact on mortgage interest rates. When the value of U.S. Treasury Bonds go up, mortgage interest rates go down.

The increased demand and buying of U.S. Treasury Bonds has forced their value up which in turn has allowed mortgage interest rates to drop to a new 50 year low.

So what does that mean for homebuyers and homeowners? That this is an EXCELLENT time to buy or refinance!

These low rates coupled with incredible home prices allows a homebuyer to literally own a home that was far beyond their reach 3 years ago, for less per month than they pay in rent. In real dollars and cents, a $150K, 30-year loan at 5% is a principal and interest payment of $805 per month.

The low rates also make it an excellent time for current homeowners to refinance. Approximately 50% of homeowners with a 30-year fixed rate loan have a rate that is higher than 6.25%. Even with the cost to refinance, it makes sense to refinance.

The hurdle that borrowers are facing is getting approved for the mortgage. Mortgage approval guidelines are more stringent than they have been in the past 12 years. Tons of paperwork will now be required and only those borrowers with excellent credit scores will be able to take advantage of the lowest available rates.

“It’s all Greek to Me”

As Americans ponder whether to take advantage of historic interest rates, few realize the great irony that the economic woes of the tiny island of Greece could be one of the key reasons for American mortgage interest rates falling to a 50 year low!

If this connection is “all Greek to you”, here is a simple explanation: Greece is a member of the Euro Zone, which is an economic and monetary union consisting of 16 European member states. These states have agreed to adopt the Euro as their sole legal currency. The Euro currency was supposed to bring economic strength and unity to the member states. But, as we all know, every group is only as strong as its weakest link. Greece seems to be that weak link.

And in typical Greek tragedy fashion, Greece is very small in comparison to the other 16 Euro Zone states. Greece has a population of only 11 million while the rest of the 16 Europen member states of the Euro Zone have a total popoulation of over 329 million. Yet Greece is that major weak link in the Euro Zone.

Greece’s national debt is now bigger than the country’s entire economy. Simply put, Greece spends 12.7% more than it currently makes in revenue. Fear of Greece’s negative impact on the value of the Euro has prompted major investors to seek safer investments such as U.S. Treasury Bonds.

Thus, Greece could be the domino that has pushed U.S. mortgage rates lower than anyone had predicted.

Let me know if you’re interested in finding out more about getting mortgage rates at a 50-year low.

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13 Responses to “Greek Tragedy Helps U.S. Mortgage Rates”

  1. Tim Howell Says:

    This is great news for homebuyers/homeowners. This is a great time to buy. With the inventory of homes we have in the Atlanta market everyone should be able to find something to their liking. There are some homeowners out there that could use a great rate to induce the refinance bug, and these rates should be the catalyst. Hopefully all the naysayers will wake up and start reporting and touting the great news in real estate to help make others aware of the great opportunity in front of us. It is time we Realtors get hot and promote this. Home affordability has never been better!

  2. Michael A. McFadden Says:

    Great NEWS!!! Thanks Judy J!!!

  3. Greg Barnum Says:

    Don’t need no shtinkin’ tax credit! Tiny Island?

  4. Carolyn Nicholes Says:

    This is good news (at least for us!). Thanks for the great article.

  5. Bridgette L. Freeman Says:

    Very informative article. Thank you for the insight!

  6. Sandi Rodrick Says:

    Who would have thought that by playing with a “Greece fire” we wouldn’t get burned to a crisp?! While I am genuinely upset over the financial troubles of the Greek government, I have no less anxiety for our people and government. These days I tell others how disheartening it is to me that someone’s “gladness” is an opportunity from someone else’s “sadness”. Still, for things to improve here and all over the world, those that have the good sense and means to take advantage of these openings need to those opportunities work for themselves and others. Thank you Judy for putting the financial troubles reported nightly on the news in terms we can relate to ourselves and our personal economy. It’s up to everyone in the real estate industry to spread the word that NOW IS THE TIME TO BUY A HOME. There’s news reported everyday but, unfortunately, the positive news doesn’t always get its fair share of publication.

  7. Deborah Gaither Realtor Delivering On The Promise Says:

    Judy
    Thanks for this information!!
    Another incentive for buyers to start that home search now!!

  8. Scott Baker Says:

    Clever headline. Aeschylus, Sophocles & Euripides verses Papandrieu and the post-modern welfare state.

  9. Martha Edwards Says:

    great NEWS !!! at least for us.

  10. Susan Adams Says:

    Is it permissable to print and share articles posted on the Metro Brokers Blog? Most are really great and some (like this one) could occastionally be appropriate on the back of a flyer, I think. Comments to this will be appreciated. I also would not want anyone to misinterpret the intent…

    Thanks!

    • Tyler Brenner Says:

      Absolutely, Susan! You are more than welcome to print it or even email a link to the article to your clients.

    • Judy Jones Says:

      Susan,
      Please always feel free to share any of the information from our blogs or other material we provide.

      Your customers and clients and friends are fortunate that you want to keep them updated with accurate information.

  11. Laura Morton Says:

    Great news. I agree that now is a good time to buy a house. But we have to use caution and common sense. And this advise goes for the lenders as well.
    The borrower must have a good credit score, a stable job and about 5% for the downpayment.
    A good credit score is now 700 plus. Remember when 600 was okay? We’re paying for those mistakes today.

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