Pat McGuire, professor of economics, was recently quoted in the Finger Lakes Times for an article about mortgage rates being at a record 50-year low.
The article says McGuire, “isn’t convinced that the lower rates will ultimately help, since smaller banks must rely on borrowing money from large financial institutions and they’re not willing to take risks right now.”
It quotes him as saying, “The only way local banks can lend is if they get additional money to do that,” and adds that he is interested in researching the activities of the housing market in Geneva versus areas of the country harder hit by the financial crisis (such as Florida and California).
“People aren’t going to start buying until they feel comfortable,” he says.
McGuire has been a member of the HWS faculty for more than three decades. He has co-taught the “Two Cities” bi-disciplinary course with Jim Spates of the sociology department for more than 20 years, has directed the Galway Ireland semester abroad and regularly leads the Washington, D.C. internship program.
The full article appears below.
Finger Lakes Times
Record-low rates keep banks busy
Home owners are eager to refinance
Craig Fox • January 8. 2009
Even with all you hear about the country’s housing crisis, now may be the time to see your banker about refinancing or buying a home: Mortgage rates recently dropped to a 50- year low.
The average 30-year fixed rate now stands at an average 5.10 percent, and federally supported Freddie Mac’s interest rate fell for the ninth consecutive week on Dec. 31.
Mortgage rates, which had averaged 6.3 percent in the third quarter of 2008, have also recently fallen into the 4 percent range in some parts of the country as a result of the Federal Reserve dropping the prime lending rate a point this fall.
They should remain at about that same level through the first part of the year, bankers said. And the lower rates are keeping area banks’ mortgage departments busy. Unable to provide specific information, bank officials said they have noticed a significant increase in mortgage applications in recent weeks, solely because of the drops in rates.
Most of those applications are for refinancing,they said.
“Our application volume peeked toward the end of 2008 and continues to be strong into 2009,” said Robert McFadden, executive vice president of the Finger Lakes Federal Credit Union.
Menzo Case, CEO and president of Seneca Falls Savings Bank, said his bank has lowered its rates in recent weeks because of Freddie Mac and Fannie Mae rates, noting that banks have been put in the position of competing with the federal government that now runs them.
Matt Parrott, a realtor with Coldwell Banker Parrott-Venuti in Geneva, just hopes that the “extremely low rates” will spur prospective buyers to act.
“It’s really a good time to buy a house,” Parrott said, adding that first-time home buyers can get a $7,500 state tax credit until June and there are other incentives through the federal government and banks that should entice home buyers.
Pete Stoller, a spokesman for the Greater Rochester Realtors Association, agreed.
Even though it’s a buyer’s market, rates are down and there are numerous incentives available, “people are still sitting on the fence” because they’ve been scared off by the national media’s negative coverage of the housing market, he said.
While admitting there was a slow time this fall, Parrott said there are signs that things are picking back up, emphasizing that 11 homes were sold in Geneva in December, up from six during that same month a year ago.
Pat McGuire, an economics professor at Hobart and William Smith Colleges, isn’t convinced that the lower rates will ultimately help, since smaller banks must rely on borrowing money from large financial institutions and they’re not willing to take risks right now.
“The only way local banks can lend is if they get additional money to do that,” he said. McGuire was surprised to hear about how well the local market did in December but would like to conduct some research about whether Geneva and the region aren’t getting hit as bad as in Florida, California and other places in the country, where the crisis followed a big housing boom earlier this decade.
“People aren’t going to start buying until they feel comfortable,” he said, adding that they’re skittish because of all the news ofbailouts, job cuts and the turmoil on Wall Street.
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