Mortgage Rate Outlook
The chart to the left shows the National monthly average for 30-year fixed rate mortgages as compiled by HSH.com.
Jul. 2, 2010 -- If you're concerned about the direction of the economy and the prospects for a robust recovery, not only are you not alone. The already-slow economic recovery seems likely to slow further.
Weak growth and investors hungry for protection against roiling stock markets are pushing interest rates down, with investor appetites for mortgage-backed securities joining that for Treasury obligations. Mortgages aren't quite as safe as government-sponsored debt, but they sport far better yields at the moment. With the world still awash in central-bank cash, the money has to find a home somewhere.
HSH's overall mortgage-rate gauge, our Fixed-Rate Mortgage Indicator (FRMI) includes rates for conforming, jumbo, and the GSE's "high-limit" conforming products and so includes a broad swath of the mortgage-borrowing public. This week, the FRMI declined seven basis points (.07%), beginning the second half of 2010 at a flat 5%. The 'best' alternative to the 30-year FRM for many folks, especially jumbo borrowers, is the hybrid 5/1 ARM, which finished the week at 4.02%.
Conforming 30-year FRMs moved down by six basis points to new 'record' lows, wandering somewhat more deeply into 1956 territory.
Low mortgage rates are a favorable support for housing markets, but the pool of folks who can take advantage of them remains limited, and the recent decline to new record-low levels is in actuality only a small dip from rates we've seen on any number of occasions over the past eight months. In this way, and aside from historical reference, it's not all that much to get excited about.
More exciting to some, though, was the extension of the transaction period to obtain the homebuyer tax credit. Decoupled from a bill objected to by Republicans, this solid and valuable idea got an 11th-hour reprieve, but it should have stood on its own merits rather than be hung on another bill. Congress could have saved itself this exercise by allowing a reasonable time frame (relative to market conditions) for transactions to be completed. The new September 30 deadline should be plenty... possibly even more than needed.
Rates are low, and even if not at record lows every week, will remain low by any comparison for some time yet. Here's hoping that during that time, economic conditions improve so that more folks can take advantage of them.
To search for Santa Cruz, Monterey Bay properties please click here, www.SusanGrant.biz, www.SantaCruzAvoidForeclosure.com or contact Susan Grant directly at (831) 247-9140.
Susan Grant, David Lyng Real Estate, Santa Cruz to Carmel
DRE#01331769
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