No matter how low rates are, people always want more. Whether rates are at 6% and you want 5.75% or in today’s market where they are at historic lows, and some still hold out for it to go even lower. Because I hear so much about the phantom 4.5% rate that is coming from the government, I thought I would put together some numbers that actually show the cost of waiting for that program to show up (assuming that it will at all).
If you have a mortgage of $250,000 and a rate of 6.5%, your monthly payment would be $1580. With a rate like that you are no doubt looking to refinance into a much lower rate that is available today. At 5%, your new payment would be $1342 (a monthly savings of $238). For most people, that is a very noticeable savings.
So what about 4.5%? Your new payment would be $1266 which is a savings of $314 over your current loan, and $76 better than the option today. But how long do you have to wait to see that rate?
The latest trend data in the bond market leads me to believe that we are in fact trending upward on mortgage rates. This is based on a number of factors, but most noteably, the new reports available about the FED’s program to buy back mortgage backed securities. It turns out that the FED is actually buying back the higher coupon rate mortgage bonds, not the ones that today’s rates are based on. This means that the bonds being purchased by the FED are actually the ones backed by current mortgages in the 6% to 6.5% range (the very ones that consumers are rushing to refinance).
This will not drive down rates further, but instead will help serve as a ceiling to keep them from moving back into the 6% range for a while. Based on this information, waiting around for rates to go lower may actually push you out of the market all together.
Using sex in advertising is about as old as advertising itself. We have seen it in beer commercials, soda commercials, magazine ads, the super bowl halftime show, blah blah blah. Anyone over the age of 12 knows what I’m talking about.
So, is the same true with Real Estate?
Well, I would argue that it depends on what kind of Real Estate you are trying to sell. For a first time buyer in a family neighborhood, it is probably not appropriate, or even effective. But, there are certain kinds of property that are inherantly sexy anyway. Beach houses, high rise condos, resort properties - all of these types of properties have a certain sexiness to them - and it just so happens that Florida has more of this kind of property than most any other state (except maybe California or Hawaii).
Shaun McLane, an Orlando Realtor, saw this as a niche that (in a sluggish real estate market) just couldn’t be ignored. He put together a video, and posted on YouTube, that got him into a little hot water and kicked up a little controversy at the same time. Shaun posted this video, and because of its contents was given an ultimatum by the managing broker of his real estate firm. He was given the choice of taking it down, or be terminated from employment.
Well…the video is still up, and he now works for a different real estate firm. While I admire his tennacity (I am equally as hard headed), I also see her point. As a real estate broker and owner of a real estate firm, she is responsible for all sales agents under her, and ultimately responsible for any advertising.
So, should she have given such an ultimatum? If it were me, I would have talked to Shaun about how we could use that kind of “outside the box” thinking to make advertising that was as eye-catching, but maybe more appealing to a general audience, rather than a hardline stance. The truth is, I was not in the meeting, so I don’t know exactly what was said or how it was said, but a more diplomatic alternative could have been more useful for both parties.
I could have posted the video right on this post, but elected to put a link to it on YouTube instead to avoid possibly offending some of my readers. While I don’t see this as pornography, it is at the very least, racey.
Good luck Shaun, and keep thinking outside the box…our industry needs it.
