Do Low Interest Rates Affect the Real Estate Market?

In one word...NO...Well not really. It wasn't the low cost of money that created the hot market we experienced or the crash that is upon us now, it was the availability of money. Good credit, bad credit, no credit, no problem, we have a loan for you! It was easy all you had to do was state that you made X amount of money and bingo your loan was approved. No money for a down
payment and closing cost? Still no problem, here's a loan for 100% financing and you can add your closing costs to the loan.

Back in 1990 when I began my Real Estate careeer you had to have a down payment of 10% to 20% to purchase a home, or qualify for a FHA loan which allowed a borrower to put down 5% for a down payment. In todays market the lenders are experiencing huge losses on the mortgages they have written. With these losses they have tightened up the availablility of funds to lend. All this means that fewer people can qualify for a mortgage. I believe this will continue until the "bad loans" are purged, mainly through foreclosures.

So hold tight through 2008, there will be light at the end of the tunnel in 2009.