Transcripts

Bargain House Hunters Better Take Aim & Take Action

PAUL KANGAS: Mortgage rates are now at their highest level this year hitting 5.29 percent in the last week. While that's historically low, people looking to refinance or buy a home were thrown for a loop by the sudden spike in rates. So if you've been sitting on the sidelines waiting for rates to fall lower, Scott Gurvey reports it may be time to get off the couch.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: In the housing market, things had been getting better, a least compared to how bad they had been. Manhattan broker Lisa Fitzig says she noticed a change from the beginning of the year.

LISA FITZIG, REAL ESTATE BROKER, THE CORCORAN GROUP: I really felt like the market was firming. It wasn't improving, but it was kind of getting firmer. There were more people out, you know, whereas I would say in January and February everything I wanted to look at was available. This time I would go to set up a meeting, in the last couple -- let's say the last couple of weeks and the house wasn't available any more.

GURVEY: The thaw in the real estate market was a direct result of record low mortgage rates which bottomed just above 4.75 percent in April. Last week's rate was 5.25 percent, up more than a third of a point from the week before. The impact of rising rates has been seen most dramatically in the refinancing market where applications have plummeted. Mortgage rates price off the 10-year Treasury bond and those yields have risen sharply. Some see that as an indication the Fed is losing its battle to hold rates down. But S&P's chief economist David Wyss says the higher rates are good news, indicating the economy is returning to normal.

DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR'S: People were afraid to buy anything except Treasuries and they were buying U.S. Treasuries, the yields which were historically low and frankly ridiculously low for any kind of a 10 year holding period that anybody could look at, up at 3.6 percent which is roughly where we are now, those yields look a lot more realistic.

GURVEY: Wyss says it is unlikely the low mortgage and interest rates of April will be revisited. Fitzig recommends would be buyers lock in their rates now.

FITZIG: It's hard to time the market, so you know when you're buying and how this affects homeowners is, prices are down. Rates may be rising. It's hard to get it just right so now may be the perfect time to buy.

GURVEY: Most analysts believe the housing market is stabilizing, but they do not expect to see a rebound until next year. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.