Mortgage Rates - How Low Can They Go?



 This week both 15-year and 30-year mortgages fell to new record lows. It is actually the 6th week in a row for such records!  Will it have the desired effect to bring the housing industry around?  Many attribute the modest gains to the fact that rates have remained under 4% since December for 30-yr loans. Another stimulus to the economy would occur if people choose to take advantage of the rates and refinance.

According to Freddie Mac, this week the 30-yr loan dropped to a record low of 3.67% (down from 3.75% last week).  The 15-year mortgage often chosen as a refinance option also declined to 2.94% (down from 2.97% last week).  Mortgage rates tend to track the yield on the 10-yr Treasury note.  This number fell last week to a 66-yr low!  To check rates or comparison shop for a loan, be sure to use our Mortgage Finder.

This is interesting news when over 62% of the sales in Pinellas County here in Tampa Bay have been all-cash purchases.  Many of our clients who would require a mortgage are either having difficulty qualifying for a home loan or not able to afford the larger down payments required by the banks.  None of the analysts are predicting rates to fall further. Actually 23% of the experts expect rates to increase over the next week.

With the demand for long term luxury rentals continuing to increase... we can see first hand the number of potential buyers who have opted instead to rent for awhile. This should be a very interesting trail to follow...

Mortgage Rates On The Rise

It would appear we can kiss 4% mortgage rates goodbye! The average rate on 30-year fixed mortgages rose last week to 4.86% (the highest level in seven months) reflecting higher yields on long-term Treasurys. Freddie Mac said last Thursday the rate increased to 4.86 percent from 4.81 percent in the previous week... It hit a 40-year low of 4.17 percent in November. The average rate on the 15-year loan rose to 4.20% from 4.15% – the highest reading in six months. It had fallen to 3.57% in November, the lowest level on records starting in 1991!

Rates overall have been rising since November as investors shift money out of Treasurys and into stocks. Many expect the tax-cut plan will fuel economic growth and increase inflation. Yields tend to rise on fears of inflation. Mortgage rates track the yields on the 10-year Treasury note.

You can get the current mortgage information right on our website and even compare rates: http://www.floridagulfproperty.com/mortgageinfo.html

Borrowers Wait For Lower Mortgage Rates and Lose

According to Janna Herron, Associated Press real estate writer, "Homeowners who delayed locking in super-low mortgage rates – think close to 4 percent for a 30-year fixed – may have waited too long." Rates are beginning to creep back up. The 30-year rate rose to 4.61 percent from 4.46 percent last week. That is well above the 4.17 percent rate hit a month ago – the lowest level on records dating back to 1971.

“People thought for a while that rates would fall below 4 percent, and they hedged on that,” said New York mortgage broker and banker Andrew Toolin, who had just been on the phone with a client who is paying 5.875 percent on his mortgage. A month ago, the client passed on what now looks like a once-in-a-lifetime opportunity: the chance to refinance at 4.125 percent. That would have put $321 more in his pocket each month. He held out, thinking he could do even better. Now the rate is up to 4.75 percent. He could still shave money off his monthly mortgage payment, but not nearly as much – about $229.“He’s wondering if he should wait for rates to go back down,” Toolin said. “He’s talking to his wife tonight about what to do.”

What is making the rates start to climb? If you look back in prior PURTEE Team Blogs, you will see that interest rates are tied directly to investor buying and selling of Treasury Bonds. With the upcoming tax deal President Barack Obama and Republicans forged that could boost the economy next year if passed, we would see a freeze on tax increases for 2011 and other stimulus tax cuts take effect. A stronger economy would make the stock market a more attractive place to invest money. That’s a big reason why many investors are selling their safer Treasury bonds. As investors sell off these Treasury bonds, rates have to increase for them to compete in the investor market. These bonds help finance the mortgages. As more bonds come on the market, prices become depressed and yields have to increase. "Prices and yields move in opposite directions."

We talk about the pendulum... which we actually thought would start to swing earlier in the year. Everyone wants to buy at the lowest rate and for the lowest price. We hear it every day. The issue is the uncertainty that lingers as to where the bottom truly is. What we do know is that buy the time the general media says it is time to buy, the real opportunities have been left behind. For additional mortgage information, check out our website... Click Here.

Mortgage Rates Hit Low Of 4.5%

Beginning in March, the forecast was that with Freddie Mac pulling out of government funding rates would start to climb as the private sector now funding these mortgage bonds would demand a higher return. That is what has economists amazed that the latest rate is the lowest for a 30-year fixed loan since Freddie began tracking rates in 1971! It also marks the fifth time in six weeks that the mortgage company has reported hitting a new average low. That makes mortgage rates are the most affordable in decades for those who can qualify for a loan.

"Refinance activity has increased over the last month as homeowners seek more affordable monthly payments. But many don’t qualify for a loan or don’t have the cash to pay for closing costs. And rates have been low for so long that many have already refinanced," according to an article published by the Associated Press last Friday.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country.

Rates on five-year adjustable-rate mortgages averaged 3.76 percent, down from 3.79 percent a week earlier.

Rates on one-year adjustable-rate mortgages fell to an average of 3.64 percent from 3.70 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for all loans.

Mortgage Rates Fall to Lowest Level Of The Year!

According to Freddie Mac, mortgage rates fell this week to a low of 4.72% for a 30-year fixed mortgage... down from 4.79% last week. We are skirting the LOWEST ALL TIME LOW set last December at 4.71%!!! As we observed back in February, a campaign by the Federal Reserve to reduce borrowing costs for consumers pushed rates down to extraordinarily low levels last year. Rates were expected to rise after the program ended this spring, but have fallen instead over the past two months.

The average rate on a 15-year fixed-rate mortgage hit 4.17 percent, down from 4.2 percent last week and the lowest on records dating back to August 1991.

Rates on five-year, adjustable-rate mortgages averaged 3.92 percent, down from 3.94 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 3.91 percent from 3.95 percent. That was the lowest average since May 2004.

We do offer a great service to compare rates online directly from our website. To see what rate you might qualify for, CLICK HERE!

Mortgage Rates Fall Last Week In Spite Of Rising For 4 Straight Weeks

We have been watching (like so many others) mortgage rates to see any impact from the Federal Reserve backing away from government backed mortgage bonds as of March 31st. See our March 27th BLOG Post. The big question was whether once those bonds had to be financed by the private sector... rates would have to rise to attract those investors.

Rates for long-term mortgages dropped last week but still remained above 5 percent, Freddie Mac said last Thursday. The average rate on a 30-year fixed rate mortgage was 5.07 percent, down from 5.21 percent the week before. It had our attention when the week of April 5th showed an average rate for a 30-year fixed mortgage at the highest since mid-August, when it was 5.29 percent. Rates had dropped to a record low of 4.71 percent in December, pushed down by a campaign by the Federal Reserve campaign in backing the mortgage bonds.

The average rate on a 15-year fixed-rate mortgage was 4.40 percent, down from 4.52 percent last week. Rates on five-year, adjustable-rate mortgages averaged 4.08 percent, down from 4.25 percent a week earlier. Rates on one-year, adjustable-rate mortgages dipped to 4.13 percent from 4.14 percent.

Although the program ended at the end of March, the Fed has left the door open to reviving the program if the economy weakens. Lower rates mean more affordable mortgages for Buyers. According to Bankrate.com, the Mortgage Rate Trend Index shows experts mixed in their forecasts with 39% believing rates will rise over the next week or so, 22% thinking they will fall and the other 39% thinking they will remain unchanged.

Don't hesitate to use our website for Mortgage Rate Comparison... and you can even apply online!

All Eyes On Fed-Back Program Ending March 31st

We have been keeping a close watch on mortgage rates with the March 31st deadline approaching. Rates have been kept down by the Fed’s $1.25 trillion program to buy up mortgage-backed securities issued by both Freddie Mac and Fannie Mae. That program is scheduled to end March 31st - this coming Wednesday. Rates on a 30-year mortgage had fallen to a low of 4.71 last December and has remained around 5% since then.

This week, mortgage rates on a 30-year fixed moved slightly higher to 4.99 but remained just below 5 percent. Many are concerned that mortgage rates could rise once the program ends, weakening the fragile recovery in housing and the overall economy. Once the Fed-based funding ends, these mortgage bond giants will be dependant on private funding. The looming question is whether private investors will demand a higher rate of return for their still somewhat risky mortgage bond investment. If that becomes the case, mortgage rates could climb quickly.

In addition this week, the average rate on a 15-year fixed-rate mortgage was 4.34 percent, up a bit from 4.33 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.14 percent, up from 4.09 percent a week earlier.

Rates on one-year, adjustable-rate mortgages rose to 4.20 percent from 4.12 percent.

Mortgage Rates At 2010 Low

With mortgage rates near their record low, many experts are advising Buyers to get their mortgage locked in now because these rates are likely to rise.

Based on a Bankrate.com survey of large lenders, the 30-year fixed-rate mortgage fell 4 basis points this week, to 5.11 percent. "The mortgages in this week's survey had an average total of 0.45 discount and origination points. One year ago, the mortgage index was 5.34 percent; four weeks ago, it was 5.15 percent." The 15-year fixed-rate mortgage fell 1 basis point, to 4.51 percent. The 5 Year ARM mortgage fell 5 basis points, to 4.51 percent.

"Mortgage professionals believe rates are poised to jump sharply within a few weeks." The rates are expected to rise because Federal Reserve plans to stop buying mortgage-backed securities by the end of March and many believe the result can be a rise of a full percentage increase in rates within the year!

Over the past year, the Fed has been purchasing up to 4/5th of new mortgage bonds keeping them at these low rates. Once they pull out and private financing has to back these bonds, many believe the rates will have to increase to get the private financing sector to accept the risk. Because of that, some are saying we will see 6% by year's end.

To compare rates and apply for a mortgage online, click here.

Mortgage Market Weekly Review

Mortgage bond prices rose last week pushing mortgage interest rates lower. The bond market was buoyed by the announcement that US Treasury increased the credit lines of Fannie Mae and Freddie Mac a total of $400 billion. This was a signal to investors that those entities are “too big to fail” as viewed by the Treasury. The mortgage industry saw some weakness Thursday afternoon as retailers reported stronger than expected holiday sales. (Keep in mind that a recovering economy will drive the mortgage rates UP.) The employment report Friday was generally bond friendly. For the week interest rates fell by about 1/4 of a discount point which brought 30-year home mortgages down to 5.09% for the first decline in a month.

The inflation data that comes out this Friday will be the most important economic data this week. Signs of stronger than expected inflation would not be good for mortgage interest rates. (see above) The Treasury auctions will also dominate trading. Stronger than normal foreign demand could bode well for the overall level of interest rates. Weaker than expected bids would likely result in interest rate increases.

The good news here in Florida is that Fannie Mae announced last Thursday that it would comprehensively review hundreds of condominium projects in Florida. Through a new “Special Approval” designation, Fannie hopes to streamline mortgage approvals for projects that don’t currently fit Fannie Mae guidelines even though they present limited risk to the company.

More on the "Special Approval" designation tomorrow...

Mortgage Rates Dip Below 5%

McLEAN, Va. – Oct. 2, 2009 – Rates on 30-year home loans dropped below 5 percent for the first time in four months, but still remained above this year’s record low, Freddie Mac said Thursday. The average rate on a 30-year fixed mortgage was 4.94 percent, down from 5.04 percent last week, Freddie Mac said. The last time the 30-year home loan averaged less than 5 percent was the week ending May 28, when it was 4.91 percent. Rates hit a record low of 4.78 percent hit in the spring, and remain appealing for people interested in buying a home or refinancing.

On Thursday, the National Association of Realtors said the number of signed sales contracts rose for the seventh straight month in August, as homebuyers rushed to take advantage of a tax credit for first-time owners that expires in November. “Low mortgage rates are helping to stabilize home sales,” said Frank Nothaft, Freddie Mac’s chief economist. But borrowers may want to consider the Federal Reserve’s announcement last week that it is slowing down a program intended to lower mortgage rates and boost the housing market. Analysts say mortgage rates should remain low for now but could eventually move higher, and homeowners who want to refinance mortgages shouldn’t delay.

The primary reason mortgage rates are destined to move up is the HUGE amount of money recently printed by the Fed which helped stabilize the declining economy and avoid a financial collapse. This money will eventually have to be pulled back out of the system, which will result in substantial increases in lending rates. The banks will have less money to lend which in turn will drive rates up.

On The PURTEE Team website, we have a great feature which allows a potential buyer to review competitive mortgage rates and even apply online! Mortgage Info

Mortgage Rates - Where Are We Headed?

Can anyone find a consensus of people/financial experts who agree on where the mortgage rate trend is headed? We would love your opinion! This article printed yesterday by the Associated Press implies rates will stabilize over the next few months. Although rates are low, mortgages have become harder to qualify for with lenders tightening up their requirements. And what happens when the mortgage to refinance is higher than the current value of the home itself? This "upside down" situation is one many people are facing. The big question is how to deal with it. Take a look at this article and make a comment on what you think the answer might be.

Mortgage rates edge down for 2nd week
Staying close to record lows reached this spring, 30-year fixed-rate mortgages averaged 5.07% this week, says Freddie Mac. Read more.