According to Lawrence Yun, who is NAR’s Chief Economist, the federal government’s purchase of Fannie Mae and Freddie Mac’s debt obligations will bring down interest rates in the long term. Yun states that, “The level of investment should be aggressive enough to bring interest rates down in a meaningful manner. As we’ve seen in past recessions, home sales rise when mortgage interest rates fall.”
Yun feels that interest rates on 30-year fixed-rate mortgages in the current mortgage market are too high. He went on to make the interesting point that, “If Fed action brings down mortgage interest rates by even one percentage point, it would increase home sales by 500,000 units. That should help to draw inventory down and stabilize prices.”
It is widely acknowledged in the real estate industry that higher home sales now are critical in order to absorb inventory and consequently stabilize prices. According to Yun, “Only with stabilization in home prices can we have a healthy housing and economic recovery.” It is crucial that this should be acknowledged.
The Fed stated that it would purchase up to $100 billion of GSE debt from primary dealers. They plan to execute this in a series of competitive auctions. Selected asset managers will purchase as much as $500 billion in MBS before the end of the year.
* Source: National Association of Realtors
If you are considering a purchase in Maui real estate, given the encouraging steps that the government is taking, we recommend taking a look at our featured condos including Puamana in Lahaina, the Whaler on Kaanapali Beach, the Kaanapali Alii, and homes at the Kanapali Vista. Mahalo, and remember that if you need any help at all, please contact Whalers Realty at (800)367-5632 or email us at