| California homeowners seem to be getting nervous. | | | | mortgages (ARMs) have also been on the decline |
| Just a few years ago, people believed that if you | | | | recently. Financial markets are convinced that a |
| bought a home in California, that you could not go | | | | slowing economy will help keep Inflation contained and |
| wrong because the equity always increased. The | | | | allow the Federal Reserve to keep Interest rates low |
| question posed today keeps coming up; Can the | | | | for the time being. According to loan officer Lynda |
| California housing market rebound if the interest rates | | | | Nelms,"second mortgage and home equity loan rates |
| for mortgage refinance and home equity loans | | | | may continue to drop." |
| continue to drop? | | | | Will the declining rates spark a California housing |
| How will the California Housing Market Rebound if the | | | | market rebound? At this point, at least the refinance |
| Interest Rates Continue to Drop? | | | | and second mortgage markets are picking up. |
| WHEN Alan Greenspan warned that the stock market | | | | Because of the falling rates, refinance application |
| was displaying signs of "irrational exuberance," share | | | | volumes are on the rise again and second mortgage |
| prices collapsed - four years later. In September 2005, | | | | application volumes continue to increase. "With |
| the now-retired Federal Reserve chairman said he can | | | | long-term interest rates having fallen far and fast in |
| glimpse similar frothiness in housing prices. | | | | recent weeks, a new refinance boom is well |
| "The market is as vulnerable today as the last time | | | | underway," says Bob Walters, chief economist for |
| we had this stretched affordability in 1989," says David | | | | Quicken Loans. "We've seen an increase in |
| Rosenberg, a Merrill Lynch economist. "It might not be | | | | homeowners refinancing out of adjustable-rate |
| on the same par as the equity bubble in the late 90's, | | | | mortgages on the verge of them resetting and out of |
| but it's not far off." Signs of this are appearing | | | | fixed-rate mortgages that are in the mid- to high-6% |
| everywhere--San Diego home sales, Orange County | | | | range." |
| home sales, Bay area home sales, Central California | | | | Historically, lowered interest rates and housing price |
| home sales and Northern California home sales are all | | | | drops have helped spark housing market rebounds. |
| slow. California home buying in general is sluggish. | | | | Remember the last California housing slump from that |
| 1st and 2nd mortgage rates continue to decline. | | | | started in 1989? The market did rebound in 1996 with a |
| 30-year fixed rate mortgages and 15-year fixed rate | | | | full recovery by 1997. It has since spiraled upward. Like |
| mortgages have been largely on the decline for the | | | | before, lowered prices and lowered interest rates |
| last several weeks after reaching a 6.93 percent peak | | | | should start the California housing market rebound. It's |
| in June. Home equity rates and adjustable rate | | | | just a matter of time. |