Interest rates moved up a bit last week but remain near historical lows. With the volatility in the stock market expected to continue, the flight to safety and bonds is expected to continue, keeping interest rates down The following are some excerpts from this week’s newsletter on interest rates from HSH Associates :
“We’ve noted many times that even mild improvements in the economic picture would likely turn mortgage rates upward a little bit. After a less-dire tone to some key economic reports last week (and even rumors of some improvement on the Euro-mess front) we got our first taste of that this week, as mortgage rates moved off record lows to former record-low levels seen just a few weeks ago.
The mild rise in mortgage rates is not a great concern. Frankly, aside from kicking refinance activity a little bit higher, the effect on mortgage and housing markets of even record-low rates has been slight. At the moment, homebuying activity is more affected by factors other than rates.
” The homebuying market is being impacted by a lot of things, but the price of mortgage money today isn’t really among them. Along with income, the mortgage’s interest rate is a regulator of how much money a borrower might be able to obtain, relative to the income available to use toward a monthly payment. When rates are low, a given level of income allows the borrower to carry a larger loan amount, but just marginally so, and of course the inverse is also true. In this regard, low mortgage rates may serve to help steady home prices, since buyers in the market can ostensibly afford somewhat higher-priced homes.
But low rates, as alluring as they are, cannot alone overcome all of the other obstacles in the market. Most notably, a weak economy and corresponding poor job market have failed to produce the kind of confidence needed to feel comfortable making the kind of forward-looking commitment which is the purchase of a home. Confidence is further eroded by the very real possibility that this expression of faith might turn into an albatross, as it has for so many of today’s homeowners and former homeowners.
Consumer confidence figures are at a low ebb and seem unlikely to improve much for the foreseeable future. Our fractious political body is now turning its attention to 2012 elections, diminishing the likelihood that solutions to our many economic problems are coming anytime soon.
So this is where we find ourselves. If the economic news is generally “better”, interest rates cannot easily fall. Should an emerging issue darken the picture, rates will ease. To the extent that volume is playing a role in firming mortgage rates, well, the minor rise in rates this week will tend to temper demand, and any premium would shrink as a result. It’s worth pointing out that if you want to see the economy get its legs back under it, you cannot expect lower mortgage rates, too. At this stage of the game, there’s little benefit in cheering for lower rates if it comes at the expense of economic promise.
Rates bumped higher this week, a little higher than even we forecast last week. They have probably overshot the mark to some degree, and with a fuller calendar of data next week, including reports on prices, home construction and sales, and more, some settling is probably the most likely course, so a decline of a few of basis points is expected. ”
The following are interest rate quotes from Al Hermann of American/California Financial Services,
30 Yr Fixed FHA
Rate 3.750 APR 4.437
Conforming 30 Yr Fixed up to $417000
Rate 4.000 APR 4.147
Conforming Jumbo 30 Yr Fixed $417001 – $625,500
Rate 4.375 APR 4.518
Jumbo 30 Yr. to $1.5 Mil
Rate 4.875 APR 5.012
Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate 3.600 APR 3.388
The following are interest rate quotes from Jan Schott Bank of America, Home Loans firstname.lastname@example.org 310-802-2300 :
Conforming Loans to $417,000
5 Yr Fixed: 2.625% @ .750pts 3.000% @ 0/pts
30 Yr Fixed: 4.125% @ .875/pts 4.375% @ 0/pts
Conforming High Balance to $625,500
5 Yr Fixed: 2.750% @ .875/pts 3.125% @ 0/pts*30 Yr Fixed: 4.250% @ .750/pts 4.500% @ 0/pts
Non-Conforming Loans to $2,000,000
5 Yr Fixed: 3.250% @ .875/pts 3.500% @ 0/pts
30 Yr Fixed: 4.625% @ .750/pts 4.750% @ 0/pts
FHA Fixed Loans to $625,500
30 Yr Fixed: 4.250% @ .500/pts 4.500% @ 0/pts
For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.