Mortgage Rates Going Up or Down?

Mortgage rates have recently gone down again after a brief rise in December. There was an article in the Wall Street Journal about the fragile underpinnings of recent positive trends in the real estate market nation-wide. They mentioned that the Fed brought down mortgage rates by committing to purchase up to $1.25 trillion in mortgage-backed securities. That program, already extended once, is set to expire in March. A Lazard Asset Management portfolio manager say rates could rise by a full percentage point after the purchases end, sapping the recovery. He predicts that house prices could fall by 15%-20% if the program ends as planned in March.

What we have seen in the past on the peninsula, is that when rates go up and buyers are more cautious, sellers get stubborn and either take their houses off the market or let them languish on the market at a high price. When sellers do that, inventory looks high on paper, but selection of properties priced at the real market rate is very limited. So, I am hoping that Ben Bernanke has the support in congress to extend the program.

Best deal in Menlo Park

350 Nova Lane in the Willows neighborhood of Menlo Park is one of those houses that should have sold immediately, but is languishing in this quirky market: $1,249,000, 4 bedrooms, 2 baths, 1,490 square feet on an almost 5,000 square foot lot - completely updated with open floor plan, big master bedroom, on a quiet cul-de-sac. The lot is on the small side, but the back yard is nicely landscaped and completely usable. It isn't my listing, but somebody should grab this!