Does this mean that forecasted high rates, foreclosures, lower prices, buyers market is not going to happen? Or do the rates fluctuate an still settle high?
NEW YORK (CNNMoney.com) – Mortgage rates continued their downward slide, reaching their lowest point since the first of the year on slower growth in the market, according to a survey released Wednesday.
The 30-year fixed-rate mortgage averaged 6.18 percent for the week ending Nov. 22, down from 6.24 percent, according to Freddie Mac’s (Charts) Primary Mortgage Market Survey. A year ago, the 30-year averaged 6.28 percent. The 30-year peaked for the year in July, at 6.80 percent. Bankrate.com
Current Mortgage Rates
Type Overall avgs
30 yr fixed mtg 5.71%
15 yr fixed mtg 5.47%
30 yr fixed jumbo mtg 6.04%
5/1 ARM 5.52%
5/1 jumbo ARM 5.72%
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The 15-year fixed-rate mortgage averaged 5.91 percent this week, down from 5.94 percent last week. A year ago, it averaged 5.81 percent. This is the lowest the 15-year has been since the week ending March 2, 2006, when it averaged 5.89 percent.
Rates for five-year adjustable-rate mortgages (ARMs) came in at 5.99 percent this week, down from 6.04 percent last week. A year ago, they averaged 5.75 percent.
One-year ARMs averaged 5.49 percent, down from 5.54 percent last week. A year ago, the one-year ARM averaged 5.14 percent.
the rates are dictated by the general condition of the economy and have nothin to do with the state of the RE market. Loan rates are strongly linked to the interest rate for the 10 Treasury Bill. That rate is now the same as it was 12 month ago despite peaking in July.
I was under the impression that higher rates would lead to housessitting on the market longer, leading to more houses on the market at the same time/competition/ leading to prices to drop. That is why I ask if rates are expected to drop or rise again, which is something noone really knows I guess.
Your impression is correct, rising mortgage rates do slow loan demand, but on a relative basis. Rates are still at near historic lows making for inexpensive money and opening the RE market to more borrowers whom might otherwise be renters. Fewer borrowers equals lower demand for existing housing. I would not concern myself with changes in interest rates until they head significantly north of current levels.
do rates impact the market? Yes, but probably not as much as you might think. Remember, below 7% was pretty much unheard of until 2001, but people have gotten use to cheap mortgage money. A lot of the impact of rising rates is more psycological than any thing (IMHO). even a 1% rise in rate means $66/mn more payment on a 100K. With the recent wild changes up and down in gas prices, my monthly fuel bill has varied more than that.
I think not too many folks would have predicted that we would be at basically the same place interest rate wise as we were in late '05. The steady rise thru the 1st 6 months of the year was what everybody expected. The reversal we have seen since mid July appears to be due at least in part to a segment of the wall street types who trade bonds and are betting the economy will go into a recession next year and have been buying bonds (driving up bond rpices, which drives down rates).
Where will it go ? who knows, but one thing is for sure is that we live in a much more global economy than say 10 yrs ago and thus the Fed raising and lower rates has much less impact than in the past. There are a lot of people holding dollars who like to invest in the US and thus like to lend us money.
One final note is a read a recent article by Greenspan where he pointed out that this low interest rate environment will not last forever since its be prolonged by foreign investment into the US.
At teh end of day, the individual RE Investor can only react to rates, not change them. Just plug in the prevailing rate of the day and figure out if the math works for your deal.