Mortgage Rate Changes are Good News for Phoenix

Some analysts are baffled at recent changes in long-term interest rates; amidst reports of increasing foreclosure notice rates and falling home prices, home mortgage rates are decreasing and lenders’ underwriting standards remain loose. Competition is fierce among lenders. The average 30-year fixed rate mortgage, according to this Wall Street Journal article, fell to 6.11% yesterday- its lowest point since mid-January. As one of the most affordable housing markets regionally, the Phoenix metro area stands to benefit most if rates remain low.

In markets fueled by entry-level and first move-up home buyers with relatively low median wages, low mortgage rates can be the difference between a sale and no sale. With significant speculative inventory to dispose of, Arizona home builders would be wise to aggressively market current rates. Mortgage rates are currently un-highlighted in sales offices and in sales advertisements.

We remain optimistic in our current forecasts for the Phoenix metro area: inventory and price stabilization should occur by mid-2007.