As we all can see that US housing crash still continues it is still not a good time to buy. Those who are thinking to buy a home are making a wrong decision they should wait till the prices falls more. I must tell you that falling house prices are the solution to your problems and not the problem itself.

House Prices are Still High

The prices are still dangerously high as compared to the incomes and rents due to this reason house prices will keep falling in most places. It is suggested by banks  that a safe mortgage is a maximum of 3 times the buyer’s yearly income. Whereas the landlords suggest that a safe price is a maximum of 15 times the tenant’s yearly rent.

However both those safety rules are still being violated in coastal areas. Although recently the price has been decreased but buyers are still borrowing 6 times their income and sellers are still asking for 30 times annual rent.

Renting is a cash business that shows those rates what people can really pay, and it does not reflects how much they can borrow. It has been proved by the salaries and rents that the prices will keep falling for a long time. Anyone who bought a “bargain” this time last year is already been suffering from a great loss.

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Mortgage rates in U.S. have fallen to another record low as the week closes. It is has declined for 10th consecutive week this time.

As Freddie Mac reported this Thursday that 30-year fixed rate mortgage yields have averaged about 5.01% for the week ending on January 8th, 2009. it is a 9 basis point decline from last weeks’ rate. It is nice to compare it with the rates this time last year. which were 5.87% .

Since The Govt. Sponsored Agency Freddie Mac started the survey(1971), this is the lowest reported level for these rates.

15-year fixed rate mortgage is even lower at 4.62%. It is has declined sharper from 4.80% levels of last week and a down hill slide of 5.43% level of this time, last year. It is said to be the lowest reported rate since June 13, 2003.

It is expected that this will impact on adjustable-rate mortgage especially the 5-year adjustable mortgages which averaged about 5.5% this week down from 5.7% last week.

Plain English: What does it mean for house owners

Well, the the house owners around US are struggling with increased cost of living and job uncertainty, these attractive rates can offer real relief in terms of monthly amount spent on home loan re-payments. Most of the homeowners will see this as an opportunity to get rid of expensive adjustable rate mortgage and get a fixed payment loan instead for the peace of mind that comes with it. As It the fixed-rate mortgages are not likely to go down any further, It is a good time to bet on them.

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