Huge Drop in Interest Rates is Great News for Buyers

Look For More Downward Pressure This Week

Just when it looked like interest rates where heading north we get a big reversal bringing them down much to the liking of every Realtor in America. While we applaud the drop the reasons behind the drop are certainly no reason to celebrate.

Last week the average overnight rate for a fixed 30 year mortgage as reported by Bankrate.com dropped to 4.48% down a full 11 basis points from the 4.59% we stood at a week ago. The benchmark 15 year fixed rate also decreased by 11 basis points last week to 3.63% from 3.74% while the benchmark 5/1 adjustable rate mortgage fell 10 basis points to 3.05% from 3.15% just seven days ago. Double digit drops do not happen very often; in fact this was the biggest 1 week drop we have seen since February.

Again, the reasons for such a large drop are certainly not what we would consider to be very good news and many experts expect the downward trend to last at least through next week. A poor report from the U.S. Department of Labor that less than 45,000 jobs had been created over the past two moths provided some of the fuel for the drop. If the new job environment does not improve, the Fed has hinted that perhaps a new round of stimulus may be required. We have been pointing out how the end of the last stimulus spending, known as QE2, could have a significant impact. As we print more dollars, to buy our own debt, it devalues the worth of those dollars and creates inflation. If you feel that pinch in the grocery store and at the gas pump you are seeing the effects of the last round of “the stimulus”. If the Fed does decide to put in another round of spending, QE3, look for more inflationary pressure.

“Results Driven Real Estate” is dedicated to providing our readers the most timely information and analysis of the metrics affecting the real estate market. It is this passion for our business and our customers that makes dealing with us different; we care not about closing the deal but ensuring we are helping each client make the right decision based on their individual circumstances.  Again, if you are going to borrow money to purchase your home NOW is the time and I beg you not too wait too long. If we can be of help in any way just give Tom a call at 561 308-0175 or send an e-mail totom@tompriester.com and we are most happy to serve you in any way that we can.

Always at Your Service,

Tom Priester  e-PRO

“Results Driven Real Estate”

Keller Williams Realty

561 308-0175

tom@tompriester.com