VA Loans Blog

Minnesota VA Loan Rates, Part II

March 17th, 2010 7:04 AM by Joan Rusco

Excuse me home builders, but your bad news may be good news for Minnesota homeowners and VA loan seekers. This week the Fed held their meeting to discuss inflation and rates and the outcome was good for consumers, for now. The Fed left their Federal Funds Rate unchanged (we discussed this rate in greater detail at ). It is likely that investors in mortgage backed securities (MBS) will read the language from the Fed as indicating that inflation is not a problem and there’s no reason for mortgage rates to rise. This even though the year old program of the Fed buying these MBS and keeping rates down comes to an end this month. So, rates are apparently going to stay somewhere in the 5% range for a VA loan, but what’s good about the bad news for builders?

The U.S. Commerce Department reported that new housing starts fell .6% from a month earlier. Apartment construction also fell to its lowest level since the mid 1990’s. That means our construction workers are hurting. But the benefits of this bad news may be homeowners. As the supply of homes for sale decreases there is more of a chance of prices for existing homes to stabilize from their 4 year slide. The supply of homes for sale is bloated way out of proportion and it may even get worse. We’re advising our clients that now is a great time to get a VA loan in Minnesota and buy a house. We at VALoansMN believe this bloated supply of homes for sale and our historic low VA loan rates is presenting an opportunity that could be characterized as “once in a lifetime”.

We fully expect this opportunity to remain for the short term. There are over 3 million existing homes for sale nationwide. There are another 5 million properties estimated to be in mortgage delinquency or foreclosure. We see the homes for sale number to consistently rise through much of this year keeping home prices down. So when we hear housing starts are sliding, we’re not surprised. What is not known is what may happen to mortgage rates. We still believe there could be considerable upward pressure in the not too distant future.

Posted in:General
Posted by Joan Rusco on March 17th, 2010 7:04 AM


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