Why not? Why aren’t you motivated to buy right now? Mortgage rates are the lowest since Freddie Mac started the survey in April of 1971.

So the lowest of low mortgage rates aren’t enough of a motivating factor for you to buy. Well, you are not alone.

American home buyers aren’t going to make their largest financial investment in such uncertain financial times, regardless of how low interest rates drop. I have heard no one complain, “I would buy right now if those interest rates weren’t so oppressively high”. Fear of the loss of their job, the inability to sell their current home and not being able to predict an end to the economic downturn are the real reasons for a slowing of home sales.

Once again the government has treated the result and not the cause of the problem in a vain effort to find a quick-fix solution to a much more complex problem than they apparently comprehend.

Another short term effect of the lower interest rates is refinancing of current loans. Individuals that make their mortgage payments are refinancing their loans at these lower rates. This is an apparent win-win. These “good” customers are getting a lower interest rate or switching from adjustable rates that can only go up to low fixed rates. Mortgage Companies are making much needed income from refinance fees, appraisals,and other charges. However, the long term effect is a loss of revenue to the mortgage companies as they will ultimately receive less from their “foundation” payment makers due to their lowered payments. Also, you are locking in homeowners to their current homes and therefore keeping them out of a marketplace they might have visited. It will be difficult for them to abandon their 5% rate for any other home a few years from now and pay a more normal 7% interest rate. That difference is literally hundreds of dollars a month.

We will have to be patient and see if the long term solutions can be found sooner rather than later.