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American Morning

Mortgage Insider Says Now is the Time to Buy

Aired April 25, 2001 - 09:22   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: The figures on the sale of new and existing homes are due out next hour. And, with the resent cuts in interest rates, you may be thinking of buying a new home or refinancing your mortgage. Joining us now to talk about the housing market is John Lowry; he's president of Lowry Mortgage Network here in Atlanta.

Thanks for being with us, John.

JOHN LOWRY, LOWRY MORTGAGE NETWORK: Thank you.

PHILLIPS: Put these numbers in perspective. Why is it so important for us to pay attention to these housing numbers?

LOWRY: Housing numbers are a reflection of the whole economy. The numbers that are coming out this morning are showing the houses -- the sales that closed last month. Those sales were started the month before that, and it takes 30 days to get the process done and closed. So, it's really a reflection of what the mindset of the economy was back in February.

And really only -- if they're low, like everyone is projecting them to be, it's only confirming what Alan Greenspan did two months ago, which would explain he have known more than we did. And it would explain why he started this rate cut binge.

PHILLIPS: So, if they come out low, what kind of impact might we see?

LOWRY: Well, it just will be a confirmation that the consumers are getting nervous. They're getting scared, they're not really moving up as much. Another interesting report that's already come out was the Housing Starts, which came out recently; and that was low.

What that tells me, is that less people are applying for building permits, less builders are building. So, they're saying, three months, nine months, six months from now, the housing market will be lower.

PHILLIPS: You would think too if the Fed is cutting rates, that automatically, people would want to refinance and go out and buy a home, but yet, 30-year mortgages are up. Explain this to me.

LOWRY: I wish I could. I could tell... PHILLIPS: Doesn't make sense, does it?

LOWRY: I'm trying to -- the consensus is that he's done a lot of cuts, he's down near the bottom. We don't know how much further he can go. He may tweak it one or two more times. If he's successful, especially with the last one which was a surprise, what the bond traders are looking at and saying, well, that will get the economy going back again. People will start spending money again, that's inflationary.

And remember, we're talking about 30-year money. What he is cutting the very shortest rate that you can cut, which is an overnight rate between banks. So, once they decided that that was inflationary, we actually had rate increases so, it had the opposite effect of what everybody thought.

PHILLIPS: Well, it's kind of scary, too, because you could see a trickle down effect, right? If homes are not being purchased or built, then electricians, plumbers, more people are out of work, and purchases are not being made.

LOWRY: Right. Right, the economy is driven tremendously by the housing market. Because if the builders aren't building as many houses, then they are not buying as many dishwashers and light bulbs or cables or carpet. And the trickle down will effect the whole economy.

So, the Housing Start sales were more disappointing to me than existing sales. The existing sales is a reflection of what happened in the past. The starts is more of a reflection of what they think will happen in the future.

PHILLIPS: Now is the time to buy.

LOWRY: Yes. Regardless of the fact that they're not as low as they were say a month ago, they are still great. Mortgages are close to a 30-year low and whether you're refinancing or buying, you can still get a great deal right now.

PHILLIPS: There's the good news right now. All right, John Lowry, thanks so much.

LOWRY: Your welcome.

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